Tata Motors' quarterly profit rose almost threefold to £250.2 million during July-September, beating analyst estimates, as its British luxury unit Jaguar Land Rover (JLR) earned higher margins. However, according to the management, the profit was lower by £11.2 million due to the conversion impact from pounds to rupees.
JLR's earnings before interest, taxes, depreciation and amortisation stood at 11.8%, surpassing a 10.6% estimation, according to a Bloomberg's analyst survey. The better margins were a result of higher sales of its new models, particularly Range Rover Velar. The second-quarter retail sales at JLR grew 5% to 1,49,000 units, with its top market China clocking an increase of 27%. The UK subsidiary also boosted Tata Motors' revenues, which expanded 10% to £7.02 billion.
Interestingly, Tata Motors has managed to halve its losses at its local unit to £29.6 million in the second quarter of fiscal 2018 from £63.1 million a year ago. The company's MD & CEO Guenter Butschek has been aggressively making efforts to turn the India business around and the strategy seems to be delivering. The domestic business registered a double-digit growth rate in sales in the three months through September, helped by new product launches and complemented by cost-reduction efforts. Revenues climbed 30% to £1.34 billion, while operating profit jumped nearly two times to £97.1 million.
JLR CEO Ralf Speth said, "We have delivered solid growth in quarterly profit and revenues amid rising demand for our products." However, Speth added that the company faces headwinds and uncertainty in some markets, but it will continue to focus on achieving profitable and sustainable growth for the rest of the fiscal. JLR invested over one billion pounds in the three months through September to increase capacity and for adoption of new technologies.
