Driven By Improvements In Supply Chain, Tata Motors' Q3FY22 Net Loss Shrinks To INR 1,516 Cr

Mobility Outlook Bureau
31 Jan 2022
06:58 PM
2 Min Read

Sharp commodity inflation continues to remain a challenge; sequential improvement in overall performance is expected to continue in Q4FY22 and beyond.


Tata Motors

Tata Motors has shrunk its net losses for the quarter ended December 31, 2021, to of INR 1,516, which was INR 2,906 crore reported in the same quarter last year period.

A communication from the company on Monday said its revenue for Q3 increased 43.3% to INR 21.0K crore and pre-tax loss before exceptional was INR 834 crore against loss of INR 542 crore in Q3FY21.

A communication from the company said that PBT decline was primarily caused due to commodity inflation despite improved volumes and mix. EBIT margin was (1.7) % (-200 bps) in the quarter.

Wholesales (including exports) increased 30.4% to 200,212 units during the quarter. The volumes across all segments significantly grew compared to Q3 FY21, despite supply challenges whilst there were all-round market share gains in both CV and PV.

The demand situation continues to remain strong despite near term concerns from Omicron spread, however, supply situation is gradually improving. Sharp commodity inflation continues to remain a challenge. The sequential improvement in overall performance is expected to continue in Q4FY22 and beyond.

In Commercial Vehicles (CVs), the focus remains to grow the market share across segments and restore margins as commodity inflation stabilises. In Passenger Vehicles (PVs), the company will continue to accelerate sales further whilst improving profitability and managing supply bottlenecks. In Electric Vehicles (EVs), the company will drive up penetration and accelerate sales further and complete the conditions precedent for securing closure of the TPG Rise Climate investment and drawdown Tranche 1, the communication said.

Girish Wagh, Executive Director Tata Motors, said, “We expect the demand for CVs, PVs and EVs vehicles to sustain even as concerns related to supply of semiconductors, high input costs and rising instances of COVID keep the overall situation fluid. We will remain agile, address supply bottlenecks proactively, drive our savings programme harder, take prudent pricing actions while continuing to make good progress in our future-fit initiatives of transforming customer experience digitally and strengthening our lead in sustainable mobility.”

JLR Expects Q4 Profits To Improve

Wholesales of JLR in Q3 were 69,182 units, up 8% over the previous quarter with production volumes growing by 41% to 72,184 units. However, sales remain significantly constrained by chip shortages and low inventories with retail sales in Q3 of 80,126 vehicles, down 13.6% from Q2 FY22 and 37.6% from Q3 FY21. The mix of electrified retail sales (BEV, PHEV and MHEV) increased to 69% in Q3 compared to 53% a year ago. 

While regional sales broadly followed total sales, model mix was more robust, with the Range Rover model family wholesales up 30%. The company is banking on its order book which has record order for almost 155,000 vehicles, up 30,000 units from Q2 reflecting strong demand for the New Range Rover, with deliveries for the model to start later in Q4 FY22.

For Q3, revenue was £4.7 billion, up 22% from Q2 FY22. EBIT margin improved from Q2 to 1.4% and free cash flow improved to £ 164 million, reflecting the increased wholesale volume, more favourable mix, pricing and FX, partially offset by a provision for quality campaigns. PBT was a £9 million loss in the quarter, the communication said.

The semiconductor shortage is expected to continue through 2022. However, it is expected to gradually improve as capacity within the supply base increases, while the company is also engaging with Tier-1 suppliers and directly with the chip manufacturers to secure supply long term. With this gradual expected improvement, JLR expects Q4 profits to improve from Q3 with positive cash flow.

Thierry Bolloré, CEO, JLR, said, “Whilst semiconductor supplies have continued to constrain sales this quarter, we continue to see very strong demand for our products underlining the desirability of our vehicles. The global order book is at record levels and has grown an incredible 30,000 units for the New Range Rover before deliveries even start this quarter. We continue to execute our Reimagine strategy to realise the full potential of the business and create the next generation of the most desirable luxury vehicles for the most discerning of customers.”

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