In India, the auto industry continues to be impacted by the general economic slowdown. The profitability was
impacted by adverse mix where despite increasing market shares, M&HCV volumes declined. This coupled with proactive system stock reduction of
₹3,800Cr resulted in loss of operating leverage. Though the near-term market situation is fluid, we are optimistic on the medium term as
we launch our exciting BS VI range of products with our system inventory at a multi-year low. We remain focused on driving our Turnaround strategy and transitioning seamlessly to BSVI.
As we strengthen our internal capabilities, we remain confident of delivering competitive, consistent and cash accretive growth.
BUSINESS HIGHLIGHTS
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China retail sales continue to grow (up 24.3%)
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Strong demand for new Range Rover Evoque (global sales up 30.0%)
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Project Charge cost and cash flow improvements beat the £2.5 billion target ahead of schedule;
Project Charge+ formally launched
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The new Land Rover Defender, completely reinvented for the digital age, revealed at the Frankfurt Motor Show in
September. Deliveries to start in the spring
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New Jaguar F-TYPE was unveiled in December, generating a very positive
customer and media reaction
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All-electric Jaguar I-PACE won
the coveted Golden Steering Award for Best Mid-Size SUV in November
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FINANCIALS
Revenues increased to
£6.4 billion, up 2.8% year-on-year. While total retail sales fell 2.3%, sales in China continued to recover (up 24.3%) and sales in North America increased by
1.1%.
Product mix was stronger, with global sales of the new Range Rover Evoque, luxury compact SUV up 30.0% and the refreshed Land Rover Discovery Sport
rising 9.2%. Retails of the Range Rover Sport and Land Rover Discovery also grew year-on-year.
Pre-tax profit increased to £318 million in the quarter, representing a £591 million year-on-year improvement versus the £273 million loss in the third quarter of last year (before an exceptional non-cash
asset impairment of £3.1 billion in Q3 of the prior year). The improvement reflected a combination of the higher China volume, stronger product mix, lower operating costs (including Project Charge) and favourable foreign exchange. Margins
also turned positive year-on-year with an EBIT margin of 3.3% and an EBITDA margin of 10.8%.
The companys Project Charge transformation programme reduced operating costs by £154 million, investment by £200 million, and
inventories by £405m in the quarter. This brings the total cost and cash flow improvements to £2.9 billion, exceeding the £2.5 billion target three months ahead of schedule. The company has now embarked on Project
Charge +, the next phase of Project Charge, which will primarily target cost savings and deliver a further £1.1 billion (£0.4billion in Q4 FY20 and £0.7 billion in FY21) of cost and cash flow improvements for a
total of £4 billion of improvements by March 2021.
Free cash flow was negative £144 million, up £217 million year-on-year, reflecting the improved profitability and lower investment spending. The latter decreased £128 million to £892 million for the period.
Despite the many challenges presently facing the industry, Jaguar Land Rover has continued to expect improved profitability and cash flow for the financial
year ending 31 March 2020 with an EBIT margin of around 3%, however, the developing situation with the coronavirus could have some impact on this.