We see a sharp rebound in the second half of FY22: JLR on investor call

Assurance comes a day after the company's stocks slumped by more than 10% following profit warnings over scarcity of semiconductors

A day after the company's stocks slumped following profit warnings by Jaguar Land Rover, the company assured the investors that it sees a strong rebound in overall volumes and cash flow in the second half of the year. The company stayed clear of giving any fresh guidance FY22 but said it doesn’t see a sharp rebound for Q3 which may in turn impact the overall revenues. Meanwhile it doesn’t plan to delay capex and the 2.5 billion pound guidance it gave earlier, remains unchanged.

“We see the cash flows improving significantly in the second half of the year. “Production will be higher in the second half as issues at Japanese and Texas chip suppliers are getting resolved. There will be a dramatic rebound once we start building back as demand is strong,” Adrian Mardell, Chief Financial Officer at JLR said. He added JLR is seeing a strong demand and has record orders of 110,000 units. The company has no plans to delay launches of new models because of the current situation, he said. The whole sales production level is expected to be in the range of 60,000 to 65,000.

On Tuesday, JLR warned investors that its volumes in the September quarter could fall short by as much as 50 per cent of the company’s expectations as a dearth of chips, which has been disrupting supplies since December, is set to deepen. It said that because of the substantial drop in wholesale volumes during the first and second quarter, the company will face cash outflows of 2 billion pound sterling in the first half of the current financial year.

According to him, the visibility regarding the chip supply issue came in only a few days back. Hence the company could not have gauged the impact on the volumes earlier, Mardell told investors explaining the sudden change in outlook. “I can assure you every day we are talking to engineers and suppliers to speed up supplies.” JLR said that the company had earlier planned production of 235,000-odd units in April-Sept but may only manage up to 150,000 units due to the shortage of chips.

Mardell claimed that so far, the cancellations for JLR have been very few, only in tens. “The bigger concern is not cancellation but supplies of chips,” Mardell said in response to a question on whether the company will see cancellations as chip supplies seem to be a bigger concern for JLR than its rivals. The chip shortage is set to make a universal impact on other automakers as well, he said.