Margin caution from Jaguar Land Rover hits Tata Motors

 
Marion Dakers
JAGUAR Land Rover’s (JLR) runaway profit growth could hit a speed bump in the next quarter, the firm said yesterday in an announcement that sent parent firm Tata Motors’ shares down as much as ten per cent.

British carmaker JLR said that while revenues rose in the last three months of 2012, its profit margin “is likely to be slightly lower than in the previous two quarters”.

Earnings are likely to be flat on the prior six months.

The firm blamed currency movements and the new, cheaper Evoque model taking up a larger portion of overall sales.

Nevertheless, JLR said it plans to stick to its capital expenditure programme, splashing out £2bn on research, development and other projects in fiscal 2013 as the company tries to capitalise on its soaring growth rate in new markets.

Free cash flow for the three months to the end of December 2012 is set to be negative as a result of this spending drive.

JLR last week posted record global sales figures for 2012, selling 357,773 vehicles in the year, a rise of 71 per cent.

The firm has said it will report its full results for the final quarter of 2012 some time in February.

Mumbai-traded shares of Tata Motors, which hit an all-time high earlier this month, were knocked yesterday by the surprisingly cautious outlook from its star performer JLR.

“Given that adverse currency movement and a weak product mix – led by Evoque – are the primary factors driving down margins, the pain may spill over to FY14,” Mumbai-based financial services firm IDFC said in a report.

• HYUNDAI Motor Co’s quarterly sales were dented by the strength of the Korean won, the firm said yesterday. The six per cent profit decline to 1.89 trillion won (£1.12bn) came even as Hyundai sold a record 1.23m vehicles in the fourth quarter.