Jaguar Land Rover’s cash flow expectations hit by chips fallout

JAGUAR Land Rover (JLR), the luxury British car brand owned by India’s Tata Motors, expects free cash flow of around £500 million (S$827.1 million) for the full financial year.

While that’s half the forecast of more than £1 billion it gave back in 2022, it significantly exceeds a more recent estimate as supply chain snarls that dented business in the second quarter eased.

JLR missed expectations in the second quarter but has beaten its second-half guidance for both volume and cash flow versus what was forecast in November of 2022 as the supply of chips gradually improved, a spokesperson said via email.

The global semiconductor shortage has undermined the luxury carmaker’s turnaround as it struggles to work through a debt reduction plan. While JLR has ramped up production of its Range Rover and Range Rover Sport models, it’s still feeling the effects from a chip dearth that has beset the entire industry over the past two years.

In November, the loss-making manufacturer said it’s cutting output of the Range Rover Velar and Jaguar F-Pace models made in the UK to focus on on higher-margin models.

Tata Motors also said on Thursday (Apr 6), when it issued fourth-quarter sales guidance, that JLR’s preliminary estimated cash balance was more than £3.7 billion as of Mar 31 while net debt was around £3 billion.

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JLR’s retail sales rose 30 per cent from a year earlier to 102,889 units in the fourth quarter while wholesales, excluding its joint venture in China, increased 24 per cent year on year to 94,649 units. The automaker’s order book remains strong at 200,000 units, Tata Motors said. BLOOMBERG