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Jaguar Land Rover has raised its profitability expectations for the year after improved Range Rover production and higher prices helped it post a fourth straight quarter of profit and record cash flow.
The fourth consecutive quarter of profitability at the company, owned by India’s Tata Motors, puts an end to a tumultuous post-pandemic period that saw the group wrack up heavy losses due to production issues and chip shortages.
On Thursday JLR said chip supply was improving, and that it expects production to increase further in the coming two quarters.
The company now expects that its profit margin will be “around 8 per cent” for the 12 months to March 2024, up from 6 per cent. Profit margins in the quarter to September were 7.3 per cent, which is lower than the 8.6 per cent it recorded in the previous three months partly due to currency fluctuations, though above the meagre 1 per cent a year ago.
Chief executive Adrian Mardell said the results “demonstrate the huge desirability of our modern luxury product portfolio”.
Between July and September it saw improved production of its Range Rover and Range Rover Sport models, its two largest cash generators. Three quarters of its 168,000 orders are for the two models, or the Land Rover Defender, which it produces in Slovakia.
Sales in North America — its largest market — as well as China and Europe were all higher than the previous three months, though the UK sales fell slightly.
Its growth in China comes as many international carmakers are struggling in the world’s largest car market. “We are doing pretty well in China, that is testimony to the power of brands, especially Range Rover and Defender in that market, which has allowed us to be quite resilient,” said finance chief Richard Molyneux.
Pre-tax profit hit £442mn in the three months to September, compared to a £173mn loss in the same quarter a year earlier, and fractionally above the £435mn of profit it recorded between April and June. Overall revenues were £6.9bn in the quarter, up from £5.3bn in the same period a year earlier.
The business generated £300mn of cash in the quarter, and a record £751mn in the past six months.
In the quarter just 13 per cent of JLR’s sales were battery electric or plug-in hybrid cars. The company, which lags rivals such as BMW in offering a range of electric models, has promised to invest £15bn in electric vehicles, and expects to launch a fully-electric version of its flagship Range Rover model next year.
Tata in July announced its £4bn investment in the UK to build a battery factory to supply JLR’s electric cars, with state assistance from the government. The group will construct a gigafactory in Somerset in south-west England, which will have capacity to produce 40GWh of cells, with supplies commencing from 2026.
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