Tata Motors Q1 net loss at Rs 1,862 crore, misses estimates by huge margin

tata motors

India’s biggest automaker Tata Motors on Tuesday reported a consolidated net loss for the quarter ended June at Rs 1,862.57 crore, missing estimates by a huge margin.

The average of estimates of 14 analysts polled by Reuters had pegged the company's bottom line to come in at Rs 224 crore.

Last year, the same quarter when the company had reported a one-time gain of Rs 3,600 crore after recalibrating the method of calculating pension liabilities at Jaguar Land Rover it net profit had come in at Rs 3200 crore. Tata Motors would have been in loss same quarter last year if not for this one-time gain.

Diesel concerns in UK and Europe, as well as the duty change impact in China, hit the company during the quarter. Earnings before interest and tax margin in China was negative 3.7 percent for JLR due to de-stocking, duty change in China, forex revaluation and higher depreciation and amortisation.

P B Balaji, Group CFO, Tata Motors, said, "We had three one-off issues during the first quarter. China (change in) duties was out nowhere, therefore customers postponed their sales. We had a planned destocking put in place. Third was the Pound Sterling to US Dollar movement in very short period of time. These three were the reasons why the (JLR margin) numbers came like that".

The Mumbai-based maker of luxury cars, trucks and sports utility vehicles recorded a consolidated total income of Rs 67,081.29 crore for the quarter, 12.14 percent higher than in the corresponding quarter last year at Rs 59,818.22 crore.

The Reuters poll had estimated the company's revenue to come in at Rs 70,320 crore.

JLR recorded a pretax loss of Pound 264 million during the quarter. Tata Motors consolidated EBITDA margin stood at 7.5 percent at the consolidated level.

At the stand-alone level the company beat street expectations to post a net profit of Rs 1187.65 crore for the reporting quarter, as compared to a loss of Rs 463.14 crore posted in the same quarter last year. The Reuters poll had expected the net profit to come in at Rs 371.8 crore.

Stand-alone revenues came in at Rs 16803.11 crore, a growth of 62 percent as compared to Rs 10366.19 crore.

Tata Motors, which is India's largest automotive company, gets 90 percent of its net profit from the two iconic British brands. Jaguar Land Rover's retail (dealer-to-customer) sales grew 5.9 percent on year during the June quarter to 145,510 units.

The British subsidiary's wholesale (company-to-dealers) sales, however, witnessed a fall of 5 percent to 131,560 units, as against 138,476 units sold in the last year same quarter.

Retail sales of Land Rover grew to 101,386 units, while that of Jaguar grew to 44,124 units. Sales of the two brands across Europe declined 7 percent, while sales growth in China, their biggest market, slowed down to just 2.5 percent.

“We are committed to delivering the 4-7 percent guidance we had given. Retails continue to be strong and UK coming back is good news. We have a full range of products coming in for instance the i-Pace. Its order book is five and half months. Range Rover and Range Rover Sport is sitting with an order book of four months. For JLR the first quarter is always the weakest quarter. On top of this there is a explicit cost reduction exercise at JLR. Combination of these factors make us comfortable to say that the 4-7 percent margin guidance is within striking distance”, added Balaji.

The company's total (domestic and exports) sales of passenger and commercial vehicles rose 61 percent year on year to 176,123 units during the quarter.

Tata Motors, which is the third-largest manufacturer of passenger vehicles in India after Maruti Suzuki and Hyundai, saw its passenger vehicles sales increase to 59,138 units, 48 percent more than it sold in the same quarter last year.

The company is also the largest domestic manufacturer of commercial vehicles (CV), sales of which rose 68 percent year on year to 117,123 units.

Meanwhile the company also said that it is ceasing manufacturing operations in Thailand as it finds business to be unsustainable in that country. That market will continue to be served through direct exports from India. Company officials however could not specify if there was any write offs because of this.