Jaguar Land Rover (JLR), the Tata Motors arm, will take a write-off of £1.5 billion in the March quarter as a one-time restructuring exercise under the “Reimagine” strategy.
This was disclosed by Adrian Mardell, the chief financial officer of JLR, to analysts on
Friday. In a presentation, he said that this includes an exceptional one-time non-cash write down of £1 billion for “higher previous spending and certain planned products that will not be completed” and £0.5 billion towards cash restructuring costs.
JLR had reported a 6.5 per cent decline in revenues for the third quarter ended December 2020 at £5.98 billion compared with £6.40 billion in the same period of the previous year.
However, on a sequential basis, it showed an improvement from £4.35 billion in the second quarter.
During the third quarter, its profit before tax stood at £439 million.
The company now expects its performance to improve further with revenues seen to rise to £30 billion by 2025-26 because of the various initiatives taken. This will be accompanied by improved profits and rising margins and strong cash generation from 2022-23 that will lead to the net debt decreasing from this year.
Mardell said in the presentation that the Reimagine strategy will enable JLR to achieve its financial potential and that the company expects to be cash flow positive by 2022-23.
JLR will be net cash positive from 2024-25. The expectation is also that its earnings before interest and tax (Ebit) margins will rise to 7 per cent by 2023-24 and at least 10 per cent by 2025-26.
He added that because of the company’ efforts so far, it has been able to bring down the breakeven in wholesales to around 400,000 units from 600,000 units in 2018-19.
Earlier this month, JLR CEO Thierry Bollore had said that the Reimagine strategy centred around the electrification of both Land Rover and Jaguar brands on separate architecture with two clear and unique personalities.
He had disclosed that its annual commitments of £2.5 billion will include investments in electrification technologies and the development of connected services to enhance the journey and experiences of customers.
On the performance of the India business of Tata Motors, group CFO P.B. Balaji said that there has been a sequential recovery in revenues amid a bounce-back in margins even as its cost saving plans are on track.
