Jaguar Profit Jumps as China Sales Surge Drives Demand

(Bloomberg) -- Jaguar Land Rover reported a 38% rise in quarterly profit as pent-up demand aided a recovery in markets led by China.

Jaguar’s profit before tax rose to 439 million pounds ($602 million) in the period ended Dec. 31 from the previous year, the British carmaker said in a statement Friday. JLR expects to generate strong profit margins and positive free cash flow in the fourth quarter and expects to reduce net debt and increase financial resilience.

While Jaguar Land Rover was encouraged by the Brexit trade deal that avoided the risk of tariffs on automotive parts and finished vehicles, there will still be increased customs administration requirements, the luxury marque said in the statement. JLR sales in China rose 20% quarter-on-quarter and 19% from a year earlier, boosting investor expectations.

JLR’s parent, Mumbai-based Tata Motors Ltd. reported a better-than-expected net income of 29.1 billion rupees. Analysts had projected a 11.7 billion-rupee profit. Tata said retail sales at the JLR unit climbed 13.1% sequentially for the quarter ending December.

JLR hasn’t seen any material impact on production even as there has been a degree of friction at the borders following the end of the transition period of the U.K.’s exit from the European Union, Tata Motors Chief Financial Officer P. Balaji told reporters in a briefing.

The company is working to find sources for battery components in the U.K. and the EU to replace parts that are currently sourced from China to meet the so-called rules of origin. Electric and hybrid models have been cut some slack in the Brexit trade deal, with the accord allowing a greater proportion of vehicle content to come from outside the U.K. or EU until 2024.

JLR, now led by former Renault SA chief Thierry Bollore, had outlined plans to cut costs by 2.5 billion pounds last year.

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