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Tata Motors announced its Q2 earnings after market hours on Tuesday. The auto major reported a consolidated net loss of Rs 314.45 crore in Q2 FY21, higher than net loss of Rs 216.56 crore in Q2 FY20.
Net sales during the quarter declined 18.4% year-on-year (YoY) to Rs 52,839.02 crore. Finance costs increased by Rs 114 crore to Rs 1,950 crore during Q2 FY21 compared with the prior year due to higher gross borrowings as compared to Q2 FY20.
Free cash flow in the quarter, was positive Rs 6,700 crore compared with negative Rs 2,500 crore in Q2 FY20.
Pre-tax loss in Q2 September 2020 stood at Rs 814.67 crore as against a pre-tax profit of Rs 621.23 crore in Q2 September 2019. The company wrote back taxes worth Rs 471.39 crore in Q2 FY21.
Jaguar Land Rover (JLR) returned to profit with significant positive cash flow in the quarter as sales and revenue recovered from the impact of Covid-19 in Fiscal Q1 but remain below pre-COVID levels a year ago. Retail sales of 113,569 units were up 53.3% quarter-on-quarter (q-o-q) with almost all retailers now open. However, retail sales in most markets continued to be impacted by Covid-19 and so were down 11.9% in total year-on-year. China sales were particularly encouraging, up 14.6% on the prior quarter and 3.7% year-on-year.
JLR revenue was £4.4 billion (on wholesales of 73,451 excluding China JV), up 52.2%from Q1FY21, although down 28.5% from pre-covid levels a year ago. Jaguar Land Rover generated a £65 million profit before tax (PBT) in the second quarter up significantly from a loss of £413 million in the prior quarter but lower than the pre-Covid PBT of £156 million a year ago. The improvement in the year reflects the recovery in sales, £0.3 billion of Project Charge+ cost efficiencies and favourable foreign exchange impact. Margins improved from Q1 with EBITDA at 11.1% and EBIT at 0.3%.
JLR's free cash flow was positive £463 million after £531 million of investment spending. The positive cash flow primarily reflects a £528 million recovery in working capital following the restart of production and the reopening of the global retailer network.
On a standalone basis, Tata Motors reported net loss of Rs 1,212.45 crore in Q2 September 2020, lower than net loss of Rs 1,281.97 crore in Q2 September 2019. Revenues declined 3.25% to Rs 9,591.18 crore during the period under review. Pre-tax loss stood at Rs 1,212.05 crore in Q2 September 2020, lower than pre-tax loss of Rs 1,269.99 crore in Q2 September 2019.
In India, passenger vehicle (PV) segment continued its strong growth momentum in the quarter and commercial vehicle (CV) witnessed gradual improvement across the segments. PV achieved EBITDA breakeven led by strong customer pull for its ‘NEW FOREVER' range. CV profitability improved sequentially but continues to be impacted by lower volumes and adverse mixon a y-o-y basis. Business generated strong positive free cash flows led by the cash savings initiatives.
“We look forward to a gradual pickup in demand and supply situation on the back of overall economic recovery expected in H2FY21. The company will focus on conserving cash by rigorously managing cost and investment spends to protect liquidity. The company has called out a cash improvement program of ₹6KCr including a cost improvement program of ₹1.5KCr.Due to these actions, the company expects improving cash flows for the remainder of the year,” Tata Motors said in a statement.
Guenter Butschek, CEO and MD, Tata Motors, said: "The auto industry continued its calibrated progress in Q2FY21 as the nationwide lockdown eased further. With health, safety and wellbeing of our employees and the supporting ecosystem at the forefront, we scaled up capacity while prudently addressing supply chain bottlenecks. In PV, we accelerated the momentum built in Q1FY21 and saw demand gradually emerge in select segments of CV. We remain hopeful for a full recovery in CV industry by end of this fiscal year aligned to the overall improvement in the economy. During the quarter, we delivered on our planned improvements in our operational and financial performance. We reiterate our commitment to make Tata Motors more agile by reducing costs, generating free cash flows, and providing the best in class customer experience."
Tata Motors, part of the Tata group, is a global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses.