Tata Motors Ltd has announced its results for quarter ending December 31, 2020.
JLR: The quarter reflected strong sequential recovery in retails in all the markets except UK where Q3 remains seasonally lower. The business achieved 6.7% EBIT margin and strong positive free cash flows of £0.6b reflecting the recovery in sales, favourable mix and Charge+ delivery. Charge+ delivered £0.4b of savings in the quarter and £2.2b year to date.
TML: India operations continued its strong growth in the quarter with CV witnessing a sequential recovery and PV witnessing continued strong growth of its “NEW FOREVER” portfolio. PV absolute EBITDA is the highest in last 10 quarters. CV profitability improved sequentially due to better mix (higher MHCV & ILCVs) and ongoing cost savings. Business generated strong positive free cash flows led by the cash savings initiatives which yielded Rs2.6Kcr in the quarter and Rs5.1Kcr year to date.
JAGUAR LAND ROVER (JLR)
Highlights
Profit before tax of £439 million, up £374 million on prior quarter and £121 million year-on-yearImproved profits reflect revenue of £6 billion, up £1.6 billion from Q2 while still lower than last yearPositive free cash flow (FCF) of £562 million, a Q3 record‘Charge+’ transformation savings of £0.4 billion in Q3, YTD £2.2 billionLiquidity of £6.4 billion with £4.5 billion of cash and £1.9 billion undrawn credit facilityElectrified options extended to 12 JLR models, including 8 plug-in hybrid, 11 mild-hybrid, and the all-electric Jaguar I-PACEDespite prevailing external risks, expect to deliver strong EBIT margins and positive FCF in Q4
Financials
Fiscal Q3 retail sales were 128,469 vehicles, up 13.1% on Q2 but still 9% lower than pre-Covid levels a year ago. Sales in China were up 20.2% on the prior quarter and up 19.1% year-on-year. Most other regions also witnessed a sequential recovery though still below prior year. Sales of the new Land Rover Defender grew to 16,286 units, +66.0% over the previous 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% (+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. 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 the $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.
Thierry Bolloré, Jaguar Land Rover Chief Executive Officer concluded, “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.”
TATA MOTORS (STANDALONE INCL. JOINT OPERATIONS)
Business Highlights
Strong all-round improvement. Revenue up 35%, EBIT at 0.3% +710bps, Rs2.2Kcr positive cash flowsCost and cash savings of Rs5.1Kcr delivered in 9M out of the Rs6Kcr target for the yearCV retails at 74.9K (96% up from Q2, -24% y-o-y)CV Market Shares: M&HCV steady at 59%, ILCV improves sharply to 46%, SCV improvement to continue.CV EBITDA at 8.0%, significant improvement in margins due to cost savings and better mixPV – ‘NEW FOREVER’ range continues its strong sales momentum. Retails up 56% y-o-y to 77.2KEV: Encouraging response. Nexon EV crosses 2500 milestone since launchPV Market Shares: YTD improves to 7.8% (vs 4.8% in FY20). Nexon EV now 64% of EV marketPV EBITDA at 3.8%, absolute EBITDA highest in the last 10 quartersStrong liquidity position as at end of the quarter amounting to Rs5.6 KcrPromoters exercise their warrants amounting to Rs2.6Kcr in Jan 2021; Proforma liquidity (incl warrants) at Rs8.2 Kcr
Financials
In Q3FY21 wholesales (including exports) increased 18.8% to 153,480 units. In the domestic market, volumes performance was mixed with M&HCV +7.0%, ILCV +10.5%, SCV & Pick Ups -9.2% and CV Passenger -71.9%. Domestic PV volumes were up 87.5%. Domestic wholesales were higher than retails by 2.5K units in CV as pipeline inventory is rebuilt post BS VI transition to healthy levels. Domestic Retails continues to be higher than wholesales in PV due to continued strong demand. Market shares of M&HCV was steady at 59%, ILCV improved sharply to 46% and SCV started improving its shares. PV market shares at 7.8%, up 300bps over FY20.
Revenue for the quarter increased 34.9% to Rs14.6Kcr and pre-tax loss was Rs601cr (against pre-tax loss of Rs1,024cr in Q3FY20). PBT losses narrowed sharply due to better volumes, improved product mix, lower VME and cost savings offset partially by lower proportion of CV in total sales, commodity inflation and financing costs. EBIT breakeven was achieved in the quarter improving 710bps over the same quarter previous year. Free cash flow for the quarter was Rs2.2Kcr, as the company drove the cost and cash savings agenda hard with Rs2.6Kcr delivered in Q3FY21. The investment spends were reduced significantly to Rs547cr for the quarter. The company ended the quarter with a strong liquidity of Rs5.6Kcr.
ADDITIONAL COMMENTARY ON FINANCIAL STATEMENTS
(Consolidated Numbers, Ind AS)
Finance Costs
Finance costs increased by Rs382cr to Rs2,126cr during Q3FY’21 vs prior year due to higher gross borrowings as compared to Q3FY’20.
Joint ventures, Associates and Other income
For the quarter, net loss from joint ventures and associates amounted to Rs281cr compared with a loss of Rs199cr in prior year. Other income (excluding grants) was Rs166cr versus Rs402cr in the prior year.
Free Cash Flows
Free cash flow (automotive) in the quarter, was positive Rs7.9Kcr (as compared to Rs3K cr in Q3FY 20). Net automotive debt, compared to Q2FY21, reduces by Rs7Kcr to Rs54.7Kcr.