3 Min Read
MUMBAI (Reuters) - India's Tata Motors has reported a worse than expected 96 percent fall in net profit for its third quarter, citing sharply lower earnings at its British luxury carmaker Jaguar Land Rover (JLR) and losses in its domestic business.
Consolidated net profit for the three months to Dec. 31 fell to 1.12 billion rupees ($16.7 million) from 29.53 billion a year earlier, the company said on Tuesday. Total income from operations fell 4.3 percent to 685.41 billion rupees.
Analysts had expected Tata Motors to post a profit of 22.48 billion rupees, Thomson Reuters data shows. Shares of the company, valued at about $24 billion, fell 3.7 percent.
Retail sales of its sleek Jaguar sedans and Land Rover sport-utility vehicles (SUVs) rose 8 percent to 149,288 vehicles in the three months through December from a year before, helped by a 38 percent rise in sales in China.
While Jaguar retail sales rose about 90 percent to 45,364 vehicles, Land Rover sales fell 9 percent to 103,924 vehicles.
JLR's net profit declined to 167 million pounds ($208 million) from 440 million a year ago, on revenue up 13.1 percent to 6.5 billion.
Tata Motors' domestic business reported a net loss of 10.46 billion rupees as it revamped its passenger vehicles business to boost sales and gain market share.
Earlier in February, Tata Motors unveiled a new brand called TAMO, aimed at testing new technologies and enabling the company to become more responsive to changing market trends.
"What is it that we need to be a high performance organization - being lean, it's about being agile and it's about having clearly addressed and delegated accountability," Guenter Butschek, MD and CEO of Tata Motors, told a news conference on Tuesday.
The company is also implementing a management transformation from the beginning of April aimed at bringing in speed, simplicity and agility to deal with market volatility, he said.
The company expects to see a much better fourth quarter, Chief Financial Officer C Ramakrishnan told the conference.
Car makers in India were also hit in the third quarter by Prime Minister Narendra Modi's "demonetization" move in November, when he declared notes of 500 rupees and 1,000 rupees illegal tender, taking about 86 percent of total currency out of circulation.
Other issues facing JLR include Britain's Brexit vote and U.S. President Donald Trump's promised protectionist policies, according to a Jan. 20 report by Mumbai-based IDFC Securities. The United States accounts for about 25 percent of JLR's sales.
"Given this, JLR is in a more precarious position than its peers," IDFC Securities analyst Deepak Jain said in the report.
Reporting by Promit Mukherjee; Writing by Aditi Shah; Editing by David Goodman and David Holmes