Tata Motors Q4 loss narrows, but revenue slides too on lower JLR sales

Tata Motors posted a sharp decline in net loss for the quarter ended March 31, 2022 after reporting a loss of well over $1 billion in the same quarter a year ago.

The automaker posted a net loss of Rs 1,033 crore for the fourth quarter, compared with a loss of Rs 7,605 crore in the three months ended March 31, 2021. While it significantly improved the bottom-line picture, some analysts had expected the company to post a nominal profit last quarter.

On a sequential basis, net loss was down by a third.

Meanwhile, consolidated revenue dropped 11.5% to Rs 78,439 crore during the fourth quarter. This was largely due to poor performance of Jaguar Land Rover (JLR), which saw sales decline by 27% over the corresponding period last year.

In comparison, the other two business units—commercials vehicles and passenger vehicles—posted strong growth in Q4.

Commercial vehicles sales rose 29.3% to Rs 18,529 crore and passenger vehicles business posted a robust 62% rise to Rs 10,491 crore.

The company’s share price skid 4% to Rs 372.1 apiece in a weak Mumbai market on Thursday.

Other Key Highlights

1) EBITDA stood at Rs 8,800 crore with margin of 11.2%, with margins shrinking by 320 basis points.

2) JLR EBITDA margins declined 270 bps to 12.6%; margins for CVs too declined 290 bps to 5.9%.

3) EBITDA margin for passenger vehicles, in contrast, rose 190 bps to 6.9%.

4) JLR business was affected by exceptional charge of £43 million in the fourth quarter relating to Russia business.

5) Expenses rose due to 50% jump in product development and engineering costs to Rs 2,752 crore.

Outlook and Management Commentary

The firm said demand remains strong despite geopolitical and inflation concerns. The supply situation is gradually improving, whereas commodity inflation is likely to remain at elevated levels.

It expects performance to improve through the year as the China COVID situation and semiconductor supplies improve. It aims to deliver strong EBIT improvement and free cash flows in FY23 to get to near net auto debt free by FY2024.

Thierry Bolloré, Jaguar Land Rover’s Chief Executive Officer, said: “The environment remains difficult in light of the global chip shortage and other challenges. However, I’m encouraged by the continuing strong customer demand for our products, highlighted by a record order book.”

Bolloré said JLR is continuing to execute its ‘Reimagine Strategy’ with new products like the Defender, New Range Rover and just announced New Range Rover Sport. JLR is also rapidly progressing its plans for a new generation of electric vehicles with its all-electric Jaguar strategy and BEV first EMA platform for new Land Rover products.

Shailesh Chandra, Managing Director for Tata Motors Passenger Vehicles Ltd and Tata Passenger Electric Mobility, said: “We posted our highest ever annual, quarterly and monthly sales in March 2022 and introduced new nameplates and aspirational variants to substantially improve our market share overall as well as in every segment of cars and SUVs where we have a presence.”

Girish Wagh, Executive Director of Tata Motors, said the Indian commercial vehicles sector, deeply impacted for two successive years, showed promising signs of growth in FY22 supported by a steady recovery in the economy, rising industrial activity and reopening of markets.

“We optimized production, introduced new passenger and cargo mobility solutions and accelerated sales to grow every quarter and gain higher market share in every segment of commercial vehicles,” he said.