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Jaguar owner posts 270b rupee loss on slump in China
[NEW DELHI] Tata Motors Ltd reported a third straight quarterly loss as luxury unit Jaguar Land Rover Automotive Plc took an impairment amid waning demand for diesel cars and risks from a potentially disorderly Brexit.
Net loss was 270 billion rupees (S$5.1 billion) in the three months through December, the company said in a statement on Thursday. Analysts predicted profit of 7.73 billion rupees on average.
Diesel vehicles account for just under 90 percent of Jaguar's sales in Europe at a time when consumers are increasingly choosing more environmentally-friendly options. By 2040, more than half of all new car sales and a third of the planet's automobile fleet -- equal to 559 million vehicles -- will be electric, according to Bloomberg NEF.
Jaguar Land Rover's heavy production presence in the UK exposes it to the risks stemming from a no-deal Brexit, whose likelihood has risen over the past few weeks, Fitch Ratings said in a note Wednesday.
Tata Motors risks sinking deeper into junk as its earnings wane. Fitch placed the company on negative credit watch, citing Brexit risks.
Shares of Tata Motors closed 2.8 per cent higher on Thursday before the earnings were announced. They are down 52 per cent in the past year on concerns about Jaguar Land Rover's waning sales, profitability and high capital-expenditure requirements.
Credit-default swaps protecting Jaguar's debt against non-payment using five-year contracts surged to record high 813 basis points on Wednesday. The cost to buy protection on Jaguar bonds was as low as 113 basis points in August 2017.
Net revenue came in at 770 billion rupees missing the 787.5 billion rupees analysts had predicted on average.