Mumbai: Jaguar Land Rover Automotive Plc (JLR) expects a turnaround in China in the coming months to shore up efforts that have delivered the first profit in four quarters for Britain’s largest automaker.
The luxury manufacturer reported net income of 119 million pounds ($151.6 million) in the three months ended March, an improvement from the record 3.1 billion-pound loss posted at the end of 2018 that shocked investors and spilled over to JLR’s Indian parent Tata Motors Ltd.
While the latest results are encouraging for JLR, its struggles in China have persisted with sales tumbling 46% in April, amid a 17% market pullback, to raise questions as to how long Tata will hang on to what was once its crown jewel. Tata Group is exploring strategic options for the luxury brand, including a potential stake sale, people familiar with the matter have said.
China should return to growth “a quarter from now," Tata Motors’ Chief Financial Officer P.B. Balaji said on Monday, reiterating the Indian company wasn’t looking to sell its luxury cars unit. Jaguar Land Rover has “managed to stabilize" in China after removing surplus inventory.
Though JLR is hardly the only carmaker suffering in China lately amid the market’s longest slump in a generation, other luxury brands like Mercedes-Benz and BMW have managed to grow sales. The Chinese government taking steps to bolster auto demand should help boost sales, Balaji said, while profitability at JLR’s dealers in China has started to stabilize.
The manufacturer, which announced 4,500 job cuts globally in January as part of a 2.5 billion-pound savings program, is particularly vulnerable to the shift away from combustion and diesel engines, and its strong historic links to the UK have fueled concern over what a disruptive Brexit could bring. The cost-cutting drive has yielded 1.25 billion in savings so far, JLR said.
Separately, JLR’s Chief Financial Officer Ken Gregor will step down after 11 years in the post to be replaced by current Chief Transformation Officer Adrian Mardell, the carmaker said.
The US-listed shares of Tata Motors rose 10% in pre-market trading and Jaguar’s bonds gained on the back if its fourth-quarter results, with its euro-denominated notes with a shorter maturity gaining the most traction on the news.
Its 500 million-euro 4.5% bonds maturing in January 2026 rose 1.8 cents on the euro to a price of 91.1, according to data compiled by Bloomberg. That bond was bid as low as 75 cents on the euro in February when the company said conditions were not right for it to borrow from the bond market, and was seeking alternative funding.
Since 2018, the company has had its junk credit rating cut three times by S&P Global Ratings.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.