Jaguar Land Rover reports fourth quarter and full-year results for Fiscal 2019/20

Jaguar Land Rover Automotive plc today reported financial results for the fourth quarter and financial year ending 31 March 2020

Jaguar Land Rover Automotive plc today reported financial results for the fourth quarter and financial year ending 31 March 2020.

The company returned to profitability with improved operating cash flow in the second and third quarters, reflecting  double-digit retail sales growth in China, as well as cost and cash flow improvements under its Project Charge transformation programme. Prior to the emergence of the Covid-19 pandemic, the company expected these trends to continue in the fourth quarter to achieve a full-year profit and meet its other financial targets for Fiscal 2019/20.

The Covid-19 pandemic significantly impacted Q4 and full-year Fiscal 2019/20.  Fourth quarter retail sales were 109,869 units, down 30.9% year-on-year, while  full year sales totalled 508,659 vehicles, down 12.1% year-on-year. As a result of lower unit sales, the company made a pre-tax loss of £501 million in Q4 and £422 million for the full year, on revenues of £5.4 billion and £23 billion respectively.

Earnings Before Interest and Tax (EBIT, which also excludes foreign exchange and commodity revaluation) were almost break-even for the year at £(24) million (EBIT margin of -0.1% was up 0.6 percentage points) and the company achieved positive cash flow of £225 million in Q4. The company ended the quarter with solid liquidity of £5.6 billion including £3.7 billion of cash and a £1.9 billion undrawn revolving credit facility.

Jaguar Land Rover responded quickly to the Covid-19 situation, implementing a temporary shutdown of all plants and rigorous cost and investment controls to conserve cash. The company is now seeing encouraging recovery in China and is gradually resuming production at the Solihull, Halewood and engine plants in the UK, as well as its Slovakia plant  and the contract assembly line in Austria.

Jaguar Land Rover’s early action to transform its business meant that as a company we were on track to meet our full-year expectations and operational and financial targets before the pandemic hit in the fourth quarter. We also reacted quickly to the disruption caused by Covid-19. Our immediate priority has been the health and wellbeing of our people – and this remains the case as we have now begun the gradual, safe restart of our operations.
Prof Sir Ralf Speth
Jaguar Land Rover Chief Executive

The company saw strong demand over the year for the new Range Rover Evoque, sales of which rose by 24.7% year-on-year and the all-electric Jaguar I-PACE, with sales up 40%. Sales of the refreshed Land Rover Discovery Sport are expected to continue to grow following its March launch in China.

New products will support the recovery of the business, including the ramp-up of the unparalleled new-generation Land Rover Defender; plug-in hybrid versions of the Range Rover Evoque and Land Rover Discovery Sport with new 1.5-litre 3-cylinder Ingenium petrol engine; and the exciting, newly-refreshed Jaguar F-TYPE.

The company is planning for a gradual recovery as lockdowns are relaxed and economies respond. The pick-up in China has been encouraging with all retailers now open, contributing to unit sales of 6,828 vehicles in April (down only 3.1% year-on-year) and 8,068 in May (up 4.2%). Sales of Range Rover and Range Rover Sport have been particularly encouraging.

Other regions saw the full impact of lockdowns in April and May with total worldwide sales of 14,709 vehicles in April (down 62.5% year-on-year) and 24,024 in May (down 43.3%). However, sales are expected to recover as retailers reopen. Most recently, about 89% of retailers worldwide are fully or partially open.

The company plans to resume production gradually to meet recovering demand. The Solihull and Halewood vehicle manufacturing plants and engine plant in the UK, the Slovakia plant and contract manufacturing line in Graz (Austria) have restarted. The reopening of our other plants will be confirmed in due course, while the joint-venture plant in China has been open since late February.

In this uncertain situation, Jaguar Land Rover will continue to manage costs and investment spending rigorously to protect liquidity. Cost and cash improvements under Project Charge increased by £600 million in Q4 to bring cumulative savings to £3.5 billion by 31 March 2020. The company has increased the Charge target for March 2021 by £1.0 billion to £5.0 billion. As part of this, Jaguar Land Rover has been deferring or delaying lower-margin and non-critical investment. The company is targeting investment spending in the region of £2.5 billion in Fiscal 2020/21: substantially lower than the spending of £3.3 billion in Fiscal 2019/20 and £3.8 billion in Fiscal 2018/19.  Against the backdrop of the Covid-19 pandemic, the company has taken the difficult decision to reduce the number of contract-agency employees in its manufacturing plants over the coming months.

As a result of the impact of worldwide lock downs on sales and plant shutdowns, free cash flow was negative c. £1.5 billion in April and May, including one-time working capital outflows of c. £1.2 billion; free cash flow for the full quarter ending 30 June is expected to be less than £2 billion negative. The outlook with Covid-19 remains uncertain. However, Jaguar Land Rover expects a gradual recovery of sales consistent with industry estimates and improving cash flow boosted by the recovery of working capital, lower investment and other Project Charge cost reductions for the remainder of the current fiscal year.

In such uncertain times, I remain convinced that Jaguar Land Rover’s focus on its people, its innovative products and its Destination Zero mission will remain the key to navigating out of this global crisis effectively. In China, we are beginning to see recovery in vehicle sales and customers are returning to our showrooms. Our operational fitness gives me confidence that we can weather this storm.
Prof Sir Ralf Speth
Jaguar Land Rover Chief Executive

SOURCE: Jaguar Land Rover

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