Jaguar Land Rover posts £270m loss amid 4,500 job losses
Car sales were down nearly 10,000 for Jaguar Land Rover as it reported a £273 million pre-tax loss for the last three months of 2018.
The luxury car maker saw revenue down from £6.3 billion a year before to £6.2bn.
JLR, which is the UK's largest car maker and has its engine manufacturing plant at the i54 north of Wolverhampton, sold 144,602 cars compared to 154,447 a year ago.
It said that its transformation programme was on track to achieve £2.5 billion of cash and profit improvement by March 2020
The fall in car sales was mainly as a result of continued challenging market conditions in China, which was offset partially by encouraging growth in North America and the UK.
The company’s sales in Europe were up slightly, despite an eight per cent drop in the overall market.
In the three-month period, sales increased for the new Jaguar E-PACE and the electric Jaguar I-PACE as well as the refreshed Range Rover and Range Rover Sport, while the slowdown in China accounted largely for lower sales of other models.
The quarter was also impacted by one-off factors including costs related to planned reduction in inventories, warranty reserve adjustments and currency and commodity revaluation.
The automotive industry is facing significant market, technological, and regulatory headwinds. At the same time, investment in new models, electrification and other technologies remains high.
Given the muted demand for its vehicles JLR has concluded that the carrying value of capitalised investments should be adjusted down, resulting in a non-cash £3.1bn pre-tax exceptional charge and an overall pre-tax loss of £3.4 billion for the quarter.
Dr Ralf Speth, JLR chief executive, said: “Jaguar Land Rover reported strong third quarter sales in the UK and North America, but our overall performance continued to be impacted by challenging market conditions in China. We continue to work closely with Chinese retailers to respond to current market conditions with a ‘pull’ based approach to vehicle sales.
“Today, we are also announcing a non-cash exceptional charge to reduce the book value of our capitalised investments. This accounting adjustment is consistent with the other decisive actions that we must take as part of our ‘Charge’ and ‘Accelerate’ transformation programmes to create an efficient and resilient business, enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry.
"We are taking the right decisions to prepare the company for the new technologies and strong product offensive that will enable a long term future of sustainable profitable growth.”
JLR realised £500m of cash improvements through the ‘Charge’ programme in the third quarter.
The company announced last month that it would reduce its global workforce by 4,500 people. This is expected to result in a one-time exceptional redundancy cost of around £200m.
The company continues to invest in new vehicles, electrification, and technology. The new Land Rover Defender will be revealed later this year.
JLR has announced that its electric drive units are to be produced at its Engine Manufacturing Centre at the Wolverhampton site.
Total investment spending for the quarter was £1bn.
JLR ended the quarter with £2.5bn of cash, after repaying a US $700m bond which matured in December. The company also had a £1.9bn undrawn credit facility available at the end of the quarter.
Dr Speth added: “This is a difficult time for the industry, but we remain focused on ensuring sustainable and profitable growth, and making targeted investments, that will secure our business in the future.”