Retail sales of Jaguar Land Rover Automotive plc, the UK’s largest vehicle manufacturer declined 13.2 per cent year-on-year to 129,887 vehicles with a pre-tax loss of £90 million for the quarter ended in September, the company said on Wednesday (31).
The sales decrease primarily reflected challenging market conditions in China, where demand was adversely impacted by consumer uncertainty following import duty changes and escalating trade tensions with the US, Jaguar Land Rover said in a release.
In North America, demand for SUVs remained strong, but overall sales were held back by slowing orders for passenger cars, in line with the market as a whole.
In Europe, sales were also affected by continuing weakness in diesel demand and the introduction of new WLTP homologation rules. UK sales were adversely impacted by diesel taxation and regulations, alongside continuing uncertainty related to Brexit.
The company reported revenues of £5.6 billion and a pre-tax loss of £90m, mainly reflecting lower sales. Earnings before interest, tax and depreciation (EBITDA) were £511m, equivalent to a margin of 9.1 per cent.
Total investment spending in the second quarter was £1bn and cash flow after this investment was negative £624m for the three-month period.
“In the latest quarterly period, we continued to see more challenging market conditions. Our results were undermined by slowing demand in China, along with continued uncertainty in Europe over diesel, Brexit and the WLTP changeover. Given these challenges, Jaguar Land Rover has launched far-reaching programmes to deliver cost and cash flow improvements. Together with our ongoing product offensive and calibrated investment plans, these efforts will lay the foundations for long-term sustainable, profitable growth,” said Ralf Speth, Jaguar Land Rover chief executive commenting on the latest quarterly results.
The company’s financial performance is expected to improve in the second half, and Jaguar Land Rover now anticipates pre-tax profits to be about break-even for the full year ending March 31, 2019, impacted by the weaker than planned first half, the company said.
As part of its focus on improving profitability and cashflow, Jaguar Land Rover has launched two initiatives, called ‘Charge’ and ‘Accelerate’, to identify short-term cost and cashflow improvements as well as longer-term operating efficiencies. Total profit, cost, and cashflow improvements of £2.5bn over the next 18 months are targeted.
As part of this, the company has taken action to reduce planned spending by about £500m to £4bn per year this financial year and next, the company added.