JLR sees margin fall in Q3

Free cash flow for 2013-14 could be negative as capital expenditure will rise to pound 2.75 bn

Jaguar Land Rover (JLR) is likely to report a lower EBITDA (earnings before interest, taxation, depreciation and amortisation) margin in the October-December quarter compared with the previous two quarters due to exchange rate fluctuations and a higher mix of Evoque sales, the company said today.

JLR, owned by Tata Motors, also said  that free cash flow for 2013-14 could be negative as capital expenditure will rise to pound 2.75 billion in the next fiscal year, up from pound 2 billion in the current year.

The company further said that it would report higher revenue in the quarter that ended in December than in the previous two quarters but similar EBITDA. JLR reported EBITDA of pound 486 million in the quarter to end-September, with an EBITDA margin of 14.8%.

Total sales for the quarter ended December were 88,658 units and total wholesale sales were 94,828 units, both up from the previous two quarters.

JLR said its strategy continued to be to profitably grow its brands and invest substantially to develop new products in new and existing segments with new powertrains and technologies to meet customer aspirations and regulatory requirements, as well as invest in manufacturing capacity to meet customer demand.

It would continue to have a longer term capital spending target of 10-12% of revenue, which it believes, is in line with other premium competitors.

In Fiscal 2013, JLR’s total capital spending is estimated to  be in the region of £2 billion (half of it for R&D and the other half on tangible fixed assets).