Jaguar Land Rover reports "significant impact" of Covid 19 as losses mount
British brands report sales down 42.4% in April-June and £413m loss before tax, with another £1bn of cost savings before March 2021 announced
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, down 42.4% year-on-year. Sales improved month by month, however, with June down 24.9% year-on-year.
Nevertheless, the slump was enough to translate to a loss before tax of £413m from revenues of £2.9bn. Although those losses are far lower than the 2019 annual figure of £3.6bn thanks to the progress of Project Charge turnaround plan, 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, however. JLR describes the sales recovery in China and North America as "particularly encouraging", with sales in the former region down 2.5% over three months and in the latter region actually up 2.2% year-on-year in June.
Further cost cutting will come for the remained of the year, however. Although £1.2bn of "cost and cash improvements" have been reported in the quarter, its 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 says 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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