JAGUAR LAND ROVER (JLR)
HIGHLIGHTS
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Covid-19 resulted in temporary retailer and plant shutdowns,
significantly impacting sales and profits
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Retail sales of 74,067 vehicles fell 42.4%
y-o-y but improved month by month through the quarter with June down 24.9%
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Revenues of £2.9b and Loss before tax of £413m, only down slightly y-o-y after £500m of Charge+ cost actions
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Chery Jaguar Land Rover JV in China achieved breakeven in the quarter
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FCF outflow of £1.5b, includes £1.1b one-time working capital
unwind and is about £500m better than guidance
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Charge+ delivered £1.2b of cost and cash improvement in the quarter and Jaguar Land Rover has increased the
FY21 full year target further from £1.5b to £2.5b, raising the lifetime target to £6b
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Liquidity at 30th June was £4.7b, comprising
£2.75b of cash and short term investments and £1.9b undrawn credit facility
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FINANCIALS
The Covid-19 pandemic continued to significantly impact the business in Q1FY21, with retail unit sales down 42.4% year-on-year. However, monthly sales improved during the quarter across all regions as economies re-opened, with June sales down 24.9%.
About 98% of Jaguar Land Rovers retailers worldwide are now fully or partially open and all the companys plants have resumed manufacturing, except for the Castle Bromwich facility, which will gradually restart from 10th August.
Revenue was £2.9b in the quarter and the company made a
pre-tax loss of £413m. However, this was only down £18m year-on-year and the EBITDA margin was 3.5% with £500m
of Charge+ cost actions substantially offsetting the lower sales. Free cash flow was negative £1.5b, primarily reflecting a one-time working capital outflow of £1.1b. Reassuringly, the Chery Jaguar
Land Rover Joint Venture in China achieved break-even profits in the quarter. Overall, these results were better than expected with total cost and cash flow improvements of £1.2b realised in the quarter from the Charge+ program. The company
successfully completed about £650m of new funding and ended the quarter with solid liquidity of £4.7b including £2.75b of cash and short-term investments and £1.9b undrawn revolving credit facility.
LOOKING AHEAD
Sales of the
New Land Rover Defender started to ramp up in the UK, Europe and North America with China and other markets starting from July onwards. Plug-in hybrid and the Hard-Top
commercial derivatives will be available later in the year. The expected recovery in sales will also be supported by the newly revealed enhancements to the Range Rover and Range Rover Sport. These flagship vehicles are now available with special
editions and a suite of upgrades, including Jaguar Land Rovers new 3.0-litre straight-six cylinder Ingenium diesel engine with Mild Hybrid Electric Vehicle
technology. Both feature advanced connectivity with Apple CarPlay and Android Auto offered as standard. Passenger wellbeing has been enhanced with new Cabin Air Ionisation, which filters harmful particulates and improves interior air quality.
For the rest of FY21, Jaguar Land Rover will continue to manage costs and investment spending rigorously. After realising £1.2b of total cost and cash
improvements under Charge+ in the quarter, the company has increased its target for FY21 from £1.5b to £2.5b. This brings the total Charge+ savings so far to £4.7b, with a target of £6b by the end of March 2021. While the
outlook remains uncertain, we expect a gradual increase in sales, profitability and cash flow over the year. In Q2FY21, volumes may not pick up sufficiently to generate a profit, however, cash flow is expected to be positive, supported by improved
working capital and continued savings. Investment spending is expected to be £2.5b for FY21.
Prof Sir Ralf Speth, JLR Chief Executive commented,
Jaguar Land Rover has reacted with resilience and agility to the extraordinary challenges faced in the first three months of FY21 adapting rapidly to the widespread macroeconomic disruption and uncertainty. Through this period, we have
continued to bring outstanding new vehicles to market, electrifying our multi-award-winning range and building the new Land Rover Defender, an icon reimagined for the digital age. As the lockdowns ease, we will emerge from the pandemic with our most
advanced product range yet, and with the financial and operating measures in place to return to long-term sustainable profit. The fundamental strengths of Jaguar Land Rover have been tested in 2020, and we will pass this test to succeed in the
future. Our exciting pipeline of new, advanced products places us at the forefront of our industry. We have a clear plan, a highly skilled, creative team, and unparalleled technical capabilities. I look forward to working with my successor Thierry
Bolloré as Jaguar Land Rover focuses on its Destination Zero mission, and seeks to deliver the autonomous, connected, electric and shared experiences that our customers will love, for life with integrity.