Profits at Britain’s largest automotive employer almost halved after a sharp drop in sales of luxury vehicles and a hit from US trade tariffs.
Jaguar Land Rover, which employs more than 33,000 people in the UK, said pre-tax profit fell 49.4 per cent to £351 million in the three months to the end of June from £693 million in the same period a year ago.
It also reported a 9.2 per cent drop in quarterly revenue to £6.6 billion after a temporary pause in exports to the US and the planned wind-down of older Jaguar models before the launch of new electric ranges next year.
The carmaker, which is owned by Tata Motors, the Indian auto group, said US tariffs had a “direct and material impact on profitability and cashflow in the period”. Over the three months the business burnt through £750 million of cash, compared with cash inflows of £1.3 billion in the previous quarter.
However, the company said the recently signed trade deal between Britain and America “will significantly reduce the financial impact of US tariffs going forward”.
JLR halted new shipments to the US in April but restarted exports in early May amid hopes that a trade deal for the sector would be struck. Wholesale sales in North America, its largest market historically accounting for nearly a third of all volumes, dropped by 12.2 per cent year-on-year in the quarter.
Last month the company announced plans to cut up to 500 management jobs as part of a voluntary redundancy programme, affecting about 1.5 per cent of the workforce.
Adrian Mardell, chief executive, said the latest financial results came amid “challenging global economic conditions”.
He added: “We are grateful to the UK and US governments for delivering at speed the new UK-US trade deal, which will lessen the significant US tariff impact in subsequent quarters, as will, in due course, the EU-US trade deal announced on July 27.”
The company will be paying 15 per cent tariffs on exports to the US of its Defender model because it is built in the European Union in Slovakia. This remodelled version of the old Land Rover vehicle accounts for about 25 per cent of all JLR sales.
It has been a challenging time in other respects for the carmaker, with its recent rebranding and advertising strategy attracting criticism.
Mardell announced plans to retire in November after three years in charge and 35 years with the company. He will be replaced by PB Balaji, group financial officer of Tata Motors.
JLR’s retail sales in the quarter fell to 94,000 from 111,000 a year ago, although not all of that was down to tariffs.
Sales of Jaguar cars fell to just 5,300 in the past quarter, a year-on-year fall of 66 per cent, as the company withdraws its petrol and diesel models before the Jaguar brand’s much-delayed rebirth as an all-electric luxury marque.