Tata Motors Q1 loss widens to ₹5,007 crore on poor JLR show

Tata Motors Ltd. said first-quarter consolidated net loss widened to ₹5,007 crore for the quarter ended June 30, from ₹4,451 crore a year earlier, primarily owing to a poor show at its Jaguar Land Rover (JLR) unit.

The domestic businesses of commercial vehicles (CVs) and passenger vehicles (PVs), however, remained profitable before tax.

Revenue grew to ₹71,228 crore from ₹65,535 crore. Retail sales at JLR were impacted by supply challenges including semiconductor shortages, slower than the expected ramp-up of the New Range Rover and New Range Rover Sport production and China lockdowns, the company said.

“The loss before tax in the quarter was £524 million before a £155 million favourable exceptional pension item. The loss primarily reflects the lower wholesale volumes with weaker mix, as well as unfavourable inflation £161 million and currency and commodity revaluation £236 million year on year,” Tata Motors said in a filing.

“The EBIT margin was (4.4)% reflecting the lower volumes and unfavourable mix. Free cashflow was negative in the quarter £(769) million, primarily reflecting £(616) million of unfavourable working capital movements,” it said. Tata Motors Group CFO P.B. Balaji, however, said in a post-earnings conference call that since the semiconductor issue had eased, JLR would witness a strong second quarter.

JLR CEO Thierry Bolloré said, “Although headwinds from the global semiconductor supply and COVID lockdowns in China have impacted our business performance this quarter, I am pleased to confirm that we have a completely reinforced organisation setup to respond to the semiconductor crisis. This is now starting to recover production growth to achieve greater volumes and will allow us to take advantage of our record order book in the second quarter.”

The CV business witnessed strong volumes growth compared with a year earlier, which was a COVID-impacted quarter. “The growth in Q1 FY23 has been broad-based across regions and segments. For India business, domestic wholesales were at 95,895 vehicles (124% growth). Exports were, however, at 5,218 vehicles, lower 22.6% affected by the financial crisis in a few export markets,” the company said.

Margin improvement was aided by higher volumes, realisations, and stable commodity prices, it added.

Executive director Girish Wagh said: “The CV industry continued to witness rising demand across all segments led by a reviving economy. With the sequential easing of semiconductor shortage and our ramp-up agility, we delivered a strong quarter with sales of 1,01,113 units registering 100% growth versus Q1 FY22”.

The PV wholesales rose 101.7% to 130,351 vehicles. “Demand for passenger vehicles continued to stay strong in Q1 FY23 even as the supply side remained moderately impacted,” the company said. “The SUV portfolio contributed 68% of Q1 FY23 sales. Margin improvement was led by strong volumes, improved mix, and impact of higher operating leverage,” it added.