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Jaguar Land Rover posts £3.4bn loss as China demand slips

09 February 2019

JLR's China retail sales nearly halved in the quarter as demand for cars from the Asian economic powerhouse shrank for the first time since the 1990s.

The company took a non-cash charge of 278.38 billion rupees ($3.9 billion) to cover the impairment at JLR in the three months to December 31.

Dr Ralf Speth, JLR chief executive, said: "Jaguar Land Rover reported strong third quarter sales in the United Kingdom and North America, but our overall performance continued to be impacted by challenging market conditions in China".

JLR's Chinese sales, which account for roughly one-in-seven of its global sales, fell 40 per cent year-on-year, which offset growth in the United States and British markets. Its heavy production presence in the United Kingdom exposes it to a disorderly Brexit, the likelihood of which has risen over the past few weeks, Fitch Ratings said this week.

The extent of the financial problems besetting Britain's largest automotive manufacturer and employer has been laid bare less than a month after it announced 4,500 job cuts across its United Kingdom facilities, mainly in the West Midlands. "Fiscal year 2019 so far has been a challenging period for the industry".

Excluding the one-off accounting charge, JLR lost £273m before tax during the last quarter.

The fall in auto sales was mainly as a result of continued challenging market conditions in China, which was offset partially by encouraging growth in North America and the UK.

The company said its commercial vehicle (CV) sales in the domestic market stood at 37,089 units in January, down 6 per cent from 39,386 units in the same month past year.

JLR realised £500m of cash improvements through the "Charge" programme in the third quarter.

In a presentation to investors, JLR said demand is likely to "remain muted due to geopolitical, economic, financial and regulatory factors" in the coming months.

Of the £3.4 billion, £3.1 billion (RM16.30 billion) accounted for the write-down on the value of its investments. The parents net loss compared with a profit of Rs 12 billion a year earlier, and also missed the average analyst estimate that called for a profit. It also plans to build a battery plant at Hams Hall in Birmingham, which will be operational by 2020. At the same time, investment in new models, electrification and other technologies remains high.

FILE PHOTO: The 2017 Land Rover Discovery is pictured at the 2016 Los Angeles Auto Show in Los Angeles, California, U.S November 16, 2016.

Jaguar Land Rover posts £3.4bn loss as China demand slips