Firm says huge one-off charge is part of recovery plan, while car sales falls are due to struggling Chinese market
James Attwood, digital editor
7 February 2019

Jaguar Land Rover posted a pre-tax loss of £3.4 billion in the final three months of 2018, caused by a massive one-off adjustment in the value of its investments. 

The loss includes a one-off £3.1 billion ‘exceptional charge’, resulting from the firm deciding to adjust the ‘carrying value’ of its capitalised investments.

Half of the charge was due to the firm acknowledging that investments in machinery and plants were worth less than previously thought. The other half is understood to be effectively lowering th evalue of past investment in product development, in recognition it will not reclaim that with future sales.

It is likely a recognition that previous investment in technology to build diesel-engined cars – which has long made up the bulk of Jaguar Land Rover's sales – won't be recouped due to the slump in demand for the powertrain.

Excluding that one-off charge, Jaguar Land Rover posted a £273 million pre-tax loss between October and December, against revenues of £6.2 billion. The firm sold 144,602 vehicles between October and December 2018, down from 154,447 in the same period of the previous year. The £273 million pre-tax loss compares with a £90 million loss in the previous quarter of 2018, running from July until September.

Jaguar Land Rover said that drop in profit was down to a slump in sales in the struggling Chinese market, which offset a slight rise in sales in Europe and the US.

Jaguar Land Rover boss Ralf Speth said the one-off £3.1 billion charge was part of the firm’s Charge and Accelerate transformation schemes, designed to invigorate the struggling company with around £2.5 billion of investment. The firm said it has made £500 million of cash improvements through measures introduced as part of those schemes.

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“We are taking the right decisions to prepare the company for the new technologies and strong product offensive that will enable a long-term future of sustainable, profitable growth,” said Speth.

Jaguar Land Rover recently announced that it would cut around 4500 jobs as part of its cost-saving measures and the firm noted that it would incur £200 million in redundancy costs in the financial quarter than runs from January to March this year.

Speth noted that Jaguar Land Rover is continuing to invest in its electrification programmes, including a plan to build a new battery assembly centre in the UK, and in its new manufacturing facility in Slovakia. The firm spent £1 billion on investments during the quarter.

“This is a difficult time for the industry,” said Speth, “but we remain focused on ensuring sustainable and profitable growth, and making targeted investments that will secure our business in the future.” 

Notably, Jaguar Land Rover's losses meant that Indian parent company Tata Motors Ltd posted its biggest-ever quarterly loss in the same period. The firm recorded a loss of £2.93 billion for the three months, which was largely down to the one-off charge. Overall, Tata Motors's revenues were up 5.0%, although the Tata brands did decline slightly in its home market.

Read more

Opinion: Why Jaguar Land Rover lost £3.4 billion

Jaguar Land Rover confirms 4500 job losses as part of transformation plan

Jaguar Land Rover factories to shut down temporarily in April due to Brexit

Jaguar Land Rover to skip 2019 Geneva motor show

 

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Comments
36

7 February 2019

Indeed, Land Rover is in very, very serious trouble.  

7 February 2019

That is a massive loss. Not enough detail here to really explain it. Are they writing down the value of stock or other Chinese assets? At least the I Pace appears to be a success.

7 February 2019
scrap wrote:

That is a massive loss. Not enough detail here to really explain it. Are they writing down the value of stock or other Chinese assets? At least the I Pace appears to be a success.

Put in simplistic terms, JLR management made a bad bet. It's a HUGE loss and nothing whatsoever to do with Brexit, but that won't stop the usual voices from blaming it.

To paraphrase Jo Moore, "It's a good time to bury bad news".

 

7 February 2019

What worries me is that they are continually investing in new technologies and facilities, wich is admirable and needed, but it is hard to see where they get the money from. Just hope they can pull it back.

Jameson

7 February 2019

Grow up - It is far from being in serious trouble - they have made enough profits over the last 10 years and have significant funds in the bank, so no, there is no worries, ALL motoring companies have hic cups, some far worse than this yet they are still here.

 

7 February 2019

Have taken over from Tesla on the BIG losses front.   Still like some of their cars/engines though

typos1 - Just can’t respect opinion

7 February 2019

A £3.4 billion loss. Are they going to blame BREXIT for this too?

7 February 2019
max1e6 wrote:

A £3.4 billion loss. Are they going to blame BREXIT for this too?

Apparently Speth blames Saturn not being in line with Mercury, the winter solstice being delayed by two days last year and...

...Brexit

typos1 - Just can't invert the ionic phase in the thrust margin of the containment field.

7 February 2019

I sincerely hope they can turn it around. The XE needed to be more competitive.

7 February 2019
I'm quite convinced Speth is being paid by a competitor to cock it up.

He is not even subtle about it.

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