JLR reports 'strong financial results '
Jaguar Land Rover Automotive plc has reported strong financial results for the three months to 31 December 2020 (Fiscal Q3), with improved pre-tax profits and its best third quarter cash flow.
Q3 retail sales were 128,469 vehicles, up 13.1 per cent on Q2 but still 9 per cent lower than pre-Covid levels a year ago. Sales in China were up 20 per cent on the prior quarter and up 19.1 per cent year-on-year.
Most other regions were also up on the preceding quarter while down from the prior-year third quarter. Sales of the new Land Rover Defender grew to 16,286 units, a 66.0 per cent increase on the prior quarter.
Profit before tax (PBT) was £439 million (after £37 million of exceptional charges), up £374 million from Q2 and £121 million from a year ago. The significant improvement reflects revenue of £6 billion, up £1.6 billion from Q2, while still lower than pre-Covid levels a year ago, with favourable sales mix, cost performance and partial reversal of prior-period reserves for emissions and residual values. EBIT margin improved to 6.7 per cent (+400bps year-on-year).
Profit and cash improvements from the Project Charge+ transformation programme in the quarter were £0.4 billion, including £0.2 billion of cost and £0.2 billion of investment efficiencies. Savings year-to-date total £2.2 billion, and the company is well on track to deliver the £2.5 billion target for the full year ending 31 March 2021.
Free cash flow in the third quarter was £562 million, primarily reflecting the strong PBT and favourable working capital after £675 million of investment spending. Cash and short-term investments increased to £4.5 billion, including $1.35 billion of five- and seven-year bonds issued in the quarter. Total liquidity was £6.4 billion including a £1.9 billion undrawn revolving credit facility.
Jaguar Land Rover was encouraged by the Brexit trade deal agreed in December between the UK and the European Union. This has avoided the risk of tariffs on automotive parts and finished vehicles, although there will still be increased customs administration requirements.
The approval of effective Covid-19 vaccines is also encouraging, with the promise of an eventual end to the pandemic. While current infection rates and associated restrictions are a challenge, all of the company 's plants and the majority of retailers are open. In markets where showrooms are closed by restrictions, in the UK in particular, sales are generally able to continue through remote solutions such as a “click and deliver ” basis.
In this environment, Jaguar Land Rover continues to expect a gradual improvement in sales supported by new and refreshed vehicles incorporating the latest technologies.
Recent new products include the short wheelbase Land Rover Defender 90 and the Range Rover Velar, Land Rover Discovery, Jaguar F-PACE, E-PACE and XF. Furthermore, electrification has now been extended to 12 of the 13 Jaguar Land Rover models, including 8 with PHEV, 11 with MHEV, and the all-electric Jaguar I-PACE BEV.
Thierry Bollor�, Jaguar Land Rover chief executive, said: “Although Covid and other risks remain, the company continues to expect to generate strong profit margins (EBIT) and positive free cash flow in the fourth quarter and targets achieving positive free cash flow in subsequent years, to reduce net debt and increase financial resilience.
“I am encouraged by the improved financial performance in this first full quarter as CEO of Jaguar Land Rover. This performance is a credit to the outstanding efforts of the employees of Jaguar Land Rover to overcome many challenges this year and I would like to thank every one of our colleagues for their contribution, particularly those who are working safely in our plants and facilities.
“Looking ahead, these challenges continue, including the Covid pandemic and its impact on the global economy, the UK 's new trading relationship with the EU and the significant technological changes taking place in the automotive industry.
“In this environment, I 'm working with my management team on plans to realise an exciting future for Jaguar Land Rover, which I look forward to sharing in due course. ”