Tata Motors Q4 profit dips but exceeds estimates
Mumbai: Tata Motors Ltd’s quarterly profit fell 16.8% from a year earlier as losses at its Indian business partially offset a surge in sales at its British luxury unit Jaguar Land Rover (JLR).
Net profit fell to Rs4,336 crore in the three months ended 31 March from Rs5,211 crore in the year earlier. Revenue declined 2.9% to Rs77,272 crore from Rs79,549 crore a year ago.
Tata Motors’ profit still beat analysts’ estimates. A Bloomberg poll of 23 analysts had estimated the Mumbai-based company to report fiscal fourth-quarter net sales of Rs78,797 crore and profit of Rs2,575.9 crore.
C. Ramakrishnan, chief financial officer of Tata Motors Group, said the company’s consolidated operating performance was impacted by volatility in the India business, particularly the commercial vehicles business.
Sales of Jaguar sedans and Land Rover sports utility vehicles, however, rose 13% to 179,509 units in the three months to March from a year earlier, driven by strong demand in the UK, US, Europe and China. The robust volume growth widened JLR’s operating margin to 14.5%, the highest in three quarters.
The higher Ebitda margin has mainly been driven by a change in foreign exchange treatment, said Nitesh Sharma, an analyst at PhillipCapital India.
During the March quarter, Tata Motors reviewed the presentation of foreign exchange gain/(loss) in the income statement. It attributed it to a continued increase in hedging activity and volatility in foreign exchange rates.
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Ramakrishan said that due to geopolitical tensions in some of JLR’s key markets, such as the UK and China, margins will continue to be under pressure for the consolidated entity in fiscal 2018. He forecast a 14-15% Ebitda margin for the full year. JLR has outlined capital expenditure of £4 billion for the current fiscal. Besides product development, it will also be utilized for building JLR’s new facility in Slovakia.
Ralf Speth, chief executive officer (CEO) of JLR, said the firm will introduce an electric car early next year. He said that even as China shows a silver lining and the UK has been stable, uncertainties abound due to Britain’s exit from Europe.
Tata Motors India operations, which had shown signs of improvement in the last few quarters, slipped back into the red. It reported a loss of Rs829.04 crore against net profit of Rs397.95 crore a year ago. Total income rose 6.7% from a year ago to Rs15,092.44 crore.
Guenter Butschek, managing director and CEO at Tata Motors, said the operating performance of the India business was adversely affected by uncertainties related to the goods and services tax, demonetization and the Supreme Court’s judgement banning sales of vehicles with older emission technology (Bharat Stage-III) from 1 April.
Tata Motors had an inventory of 15,000 unsold BS-III vehicles as on 31 March, most of which had to be sold at heavy discounts. The company took a hit of Rs 148 crore on account of giving customers a stock clearance discount. It has treated it as a one-time loss.
Butschek said he is hopeful of an improved performance after the recent round of restructuring and stronger truck sales in the second half. A steady increase in passenger vehicle sales, where Tata Motors has been outperforming the industry, will also aid recovery.