Tough market conditions slash Tata Motors’ Q4 FY19 profit by 47%

Rough and tough market conditions for Tata Motors have impacted the company's profitability. In Q4 FY2019, the company reported consolidated revenue of Rs 86,422 crore, down 3.9 percent, while Profit After Tax (PAT) de-grew by 47 percent at Rs 1,117 crore (Q4 FY2018: Rs 2,125 crore).

The vehicle major has attributed the sharp decline in Q4 profit to tough market conditions, including stress on liquidity, higher truck capacity arising from axle load norms (leading to reduced buying) and lower economic activity. For FY2019, the company reported revenues of Rs 301,938 crore (+3.28%), and a loss after tax of Rs 28,826 crore, compared to PAT of Rs 8,988 crore in FY2018.

In terms of Tata Motors standalone business, (including joint operations), the company's 'Turnaround 2.0' strategy has started delivering results despite the challenging conditions. In FY2019 the company reported revenues of Rs 69,203 crore (+20.3%), which helped the company report a profit of Rs 4,021 crore (including tax credits of Rs 1,900 crore in Q4).

Guenter Butschek, CEO and MD, Tata Motors, said: “Q4 FY2019 has been extremely tough with market sentiments remaining muted, impacting demand across segments. The industry outlook is not going to be anything different in the short term due to multiple uncertainties. To mitigate this impact, we have strengthened our actions under the ongoing turnaround. With intense sales activation, new product launches, continued thrust on cost reduction, we have been able to improve our business performance across the board and post strong financial results for the fiscal while improving our market shares. PV (operations) has been able to close FY2019 with EBIDTA breakeven. Our EV business has started making early inroads into the market and is set to grow. With our updated vision of becoming the most aspirational brand, consistently winning in CVs, PVs and EVs, we remain optimistic for fiscal year 2020.”

Despite headwinds, JLR project ‘Charge’ on track
Tata Motors' British luxury car business, Jaguar Land Rover, despite improved sales in the UK and North American markets, the continued weakness in the Chinese market led to a decline of 5.8 percent YoY in retail sales. However, the company says the ‘Charge’ programme has delivered huge cash savings and cost efficiencies so far.

Prof Dr. Ralf Speth, chief executive, Jaguar Land Rover, said, “JLR has been amongst the first companies to address the multiple headwinds simultaneously sweeping the automotive industry, with concerted action to reduce complexity and transform its business through cost and cash flow improvements. We have returned to profitability this quarter and already delivered 1.25 billion pounds (Rs 11,068 crore) of efficiencies and savings. JLR is focused on the future as we overcome the structural and cyclical issues that impacted our results last year. We will go forward as a new company that is leaner and fitter, building on the sustained investment of recent years in new products and the autonomous, connected, electric and shared technologies that will drive future demand.”

N Chandrasekaran, chairman, Tata Sons, commented, “Our domestic business delivered a resilient performance in the face of challenging market conditions. We have continued to step up our pace of innovation, improved our market shares as well as our profitability. The ‘Turnaround 2.0’ strategy is delivering well, and I am confident that the business is getting the building blocks in place for long term success."

"In JLR, we continue to face challenges in China which we are addressing on priority. To weather the volatile external scenario, we are taking decisive steps to step up competitiveness, reduce breakeven and improve cash flows whilst continuing to invest in exciting products and leading-edge technologies. With these structural interventions, I see Tata Motors Group building the right business model to deliver Competitive, Consistent and Cash Accretive Growth over the medium to long term,” added Chandrasekaran.