Jaguar Land Rover reports "significant impact" of Covid-19 as losses mount
Jaguar Land Rover (JLR) has revealed the extent of the effect of the coronavirus pandemic in its quarterly results, with substantial losses and slumping sales.
The two brands posted combined retail sales of 74,067 for the period from the end of the fiscal year in March to the end of June. That represents a fall of 42.4% year on year. Sales improved month by month, though, with June down 24.9% compared with the same month last year.
Nevertheless, the slump was enough to produce a loss before tax of £413 million from revenues of £2.9 billion. Those losses are far lower than the 2019 annual figure of £3.6bn thanks to the progress of the Project Charge turnaround plan, but they're not far off the £422m loss reported for the entire last financial year.
JLR is keen to stress its liquidity is now "solid", with £647m of new funding secured and £4.7bn in reserve, including £2.75bn cash and investments and £1.9bn of undrawn revolving credit. Free cash flow was negative £1.5bn, around £500m better than previous guidance.
The UK market was "particularly impacted" due to the pandemic, with sales down nearly 70% reflecting a similar wider industry figure. However, 98% of the company's plants have now resumed production worldwide, with Castle Bromwich still to be opened on 10 August.
The figures do reveal some positives, though. JLR describes the sales recovery in China and North America as "particularly encouraging", with sales in China down 2.5% over three months and in North America up 2.2% year on year in June.
However, further cost cutting will come for the remainder of the year. Although £1.2bn of "cost and cash improvements" have been reported in the quarter, JLR's full 'Charge+' cost-saving target for the full year has been raised from £1.5bn to £2.5bn. A total of £6bn in cost-saving measures is predicted by the end of March 2021. It's not yet clear whether this extra £1bn of cost cuts will impact jobs.
Land Rover notes "building demand" for the new Defender. It actually outsold (in registrations) the majority of the brand's range throughout June, beaten only by the ever-popular Evoque and Range Rover Sport. CEO Ralf Speth said the company "will emerge from the pandemic with our most advanced product line-up yet, and with the financial and operating measures in place to return to long-term sustainable profit."
The quarterly results announcement follows the confirmation earlier this week of former Renault CEO Thierry Bolloré taking over from Speth as CEO in September.
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