India Tata Motors first quarter profit triples, driven by Jaguar Land Rover sales
NEW DELHI, India (AFP) — Tata Motors' net profit more than tripled in the first quarter, the Indian giant said yesterday, driven by soaring sales of its British luxury marque Jaguar Land Rover.
India's biggest automaker said consolidated group net profit climbed to 53.98 billion rupees (US$882.3 million) in the three months to June from 17.26 billion rupees for the same quarter of the previous year.
The figure easily outdistanced analysts' forecasts of a profit of around 35.3 billion rupees.
But Tata Motors, which also makes the ultra-cheap Nano hatchback, reported net profit at its Indian operations slid 44 per cent to 3.94 billion rupees.
The profit tumble reflected "a continuing weak operating and economic environment in the standalone business", Tata Motors said in a statement.
But this "was more than offset by strong demand for new products, growth in volumes," Tata Motors said.
The earnings statement came ahead of the company's launch of a new compact sedan model which Tata Motors hopes will revitalise car sales.
The model launch is the company's first in four years.
Tata Motors' domestic performance has declined as it has lost market share to rivals Maruti Suzuki India and Hyundai. Tata's car model designs have been panned by critics as dull.
Tata Motors, part of the sprawling Tata tea-to-steel conglomerate, is now hugely reliant on revenues from Jaguar Land Rover (JLR), which it bought for US$2.3 billion from Ford in 2008 at the height of the global financial crisis.
The purchase, seen by auto analysts at the time as a risky gamble, has paid off dramatically with the iconic premium cars propelling Tata Motors' profits.
Consolidated revenue soared 38.2 per cent to 646.83 billion rupees in the three months to June from a year earlier, the company said.
Tata Motors' shares finished up 3.3 per cent at 447.40 rupees ahead of the results' release on investors' expectations of good earnings figures.
Jaguar Land Rover's sales jumped 22 per cent to 115,596 units from the same period a year earlier, helped particularly by strong demand in China, offsetting a dive in Indian domestic sales.
Sales in India of the company's trucks, buses and passenger vehicles slid by 28 per cent in the quarter to 110,612 units.
Car sales in India, the world's sixth-largest auto market, are expected is grow by five to 10 per cent this year, after declining for two straight years, according to an industry group forecast.
The decline in car sales came against a backdrop of a sharp slowdown in India's economy along with high financing costs.
But India's car sales have begun to pick up speed amid what analysts say is a revival of consumer confidence under the newly elected right-wing government led by Narendra Modi.
Passenger car sales grew for a third straight month in July, rising by five percent from a year earlier, according to the Society of Indian Automobile Manufacturers.