SLUMP: Poor China performance hits car maker
India’s largest car maker Tata Motors reported a near 50 per cent fall in quarterly profits last Friday (7) due to a slump in sales of its luxury British unit in China.
Consolidated net profit for the three months to June fell to Rs 27.69 billion (£280 million) from Rs 53.98bn a year ago, a drop of 48.70 per cent, the Mumbai-based company said.
That was well below the expectations of analysts surveyed by Bloomberg, who had predicted that the firm, part of Tata’s sprawling tea-to-steel conglomerate, would report profits of Rs 31.4bn.
It marked the company’s second consecutive large fall in quarterly profits, following a 56 per cent slump announced in May.
The latest fall was “primarily driven by weak China sales (of Jaguar Land Rover JLR),” Tata Motors president and chief financial officer C Ramakrishnan told reporters.
JLR shifted only half the number of luxury cars that it sold in the same period last year, Ramakrishnan said.
A sales increase in India helped stem the slide in profits, the company said in a statement.
Consolidated revenue slid 5.57 per cent to Rs 610.20bn (£6.16bn) from Rs 646.83bn, while revenue from JLR fell to £5bn from £5.35bn.
In India, the firm earned Rs 8.05bn in the quarter to June, lower than last year due to a rise in costs to Rs 1.17bn (£112.86m) from Rs 945m a year ago.
Tata Motors is hugely reliant on revenues from JLR, which it bought for $2.3bn (£1.49bn) from Ford in 2008 at the height of the global financial crisis.