Jaguar owner posts RM16b quarterly loss as China demand weakens

MUMBAI • Tata Motors Ltd reported a third straight quarterly loss as luxury unit Jaguar Land Rover Automotive plc took an impairment of 278.4 billion rupees (RM15.89 billion), mainly on account of challenges in the China market.

Net loss was 270 billion rupees in the three months through December, the company said in a statement yesterday, as it battled waning demand for diesel cars and risks from a potentially disorderly Brexit.

Analysts predicted profit of 7.73 billion rupees on average.

Diesel vehicles account for just under 90% of Jaguar Land Rover’s sales in Europe at a time when consumers are increasingly choosing more environmentally-friendly options.

By 2040, more than half of all new car sales and a third of the planet’s automobile fleet — equal to 559 million vehicles — will be electric, according to Bloomberg NEF.

Tata Sons Pte Ltd chairman N Chandrasekaran said market conditions continue to be challenging, particularly in China.

The company is taking “decisive steps” to increase its competitiveness, reduce costs and improve cashflows, he said in a statement yesterday.

Tata Motors risks sinking deeper into junk as its earnings wane. Fitch placed the company on negative credit watch, citing Brexit risks.

Shares of Tata Motors closed 2.8% higher yesterday before the earnings were announced. They are down 52% in the past year on concerns about Jaguar Land Rover’s waning sales, profitability and high capital-expenditure requirements.

Credit-default swaps protecting Jaguar Land Rover’s debt against non-payment using five-year contracts surged to record high 813 basis points on Wednesday.

The cost to buy protection on Jaguar Land Rover bonds was as low as 113 basis points in August 2017.

Net revenue came in at 770 billion rupees missing the 787.5 billion rupees analysts had predicted on average.

Tata Motors expects the costs from Jaguar Land Rover’s voluntary redundancy programme to be recognised in the March quarter. — Bloomberg