Tata Motors net plunges 49% as slowing China thwarts JLR surge

Tata Motors today reported a near halving of its net profit at Rs 2,768.91 crore for the three months through June, hit by a massive 50 per cent fall in JLR profit due to a sales plunge in China.
The home-grown auto major had registered a consolidated net profit of Rs 5,398.21 crore in the same quarter last year.
The numbers would have been worse had it not been for the one-time tax gain from China (the quantum of which the company did not specify) as well as the 50 million pounds forex gains during the quarter, wherein its adjusted net income from JLR nearly halved to Rs 2,847 crore year-on-year in rupee terms.

This is the first major decline in both sales and profits for Tata Motor's cash-cow Jaguar-Land Rover brands since the company was turned around this early decade, following headwinds in China which is the largest market for the marquee British brands, which Tata Motors bought during the 2008 financial crisis for USD 2.8 billion from Ford.
From 29.7 per cent share in its overall sales a year ago, the share of China sales fell to a low 14.4 per cent in the reporting quarter, Tata Motors Group chief financial officer C Ramakrishnan told reporters here this evening.
He, however, said that weaker performance was on expected lines as JLR discontinued some major brands and launched new models globally as well as in China, where it also started locally producing some of the models at its JV with Cherry Auto.

"The financial performance in the quarter is lower than the strong corresponding quarter last year when its net stood at Rs 5,398.21 crore, which due to softer sales in China partially offset by strong performance in Britain, Europe and North America," he said.

However, he was quick to add that China remains a very important market for JLR as it is the world's largest car market and the fastest growing premium car market.
He also blamed higher base effect of last June quarter as one of the reasons for the low numbers this quarter as the company had reported a consolidated net profit of Rs 5,398.21 crore then which was one of its best in recent years.

Consolidated sales declined 6.2 per cent to Rs 60,180.57 crore from Rs 64,150.74 crore, while JLR revenue fell 9.64 per cent to 5.02 billion pounds from Rs 5.35 billion pounds, yanking down its pre-tax profit by over a third to 638 million pounds from 924 million pounds, as the China fall offset the strong performance in Britain, Europe and North America.
In rupee terms, JLR's adjusted net almost halved to Rs 2,847 crore year on year, the company said.
The Chinese economy has slowed to its slackest pace in 25 years and low consumer confidence is affecting car sales.
As a result, JLR sales in China fell by a third to 21,920 units during the June quarter, pulling down total sales at the luxury carmaker by 1 per cent to 1,14,905 units, while its sales in Europe rose 28 per cent to 28,878 units.