Jaguar Land Rover plans cuts after reporting £281m losses
Jun 26 2009 By Graeme Brown
Jaguar Land Rover made a loss of £281 million in the first 10 months after it was taken over by Indian firm Tata Motors, it emerged today.
The Mumbai-based firm said it planned to cut costs drastically after reporting its first annual loss in eight years as it was hit by slumping demand and losses at the Jaguar and Land Rover unit it bought in 2008.
It has seen a £315 million pre-tax profit made in 2007 turned into a £272 million deficit despite sales almost doubling to £8.8 billion.
In a statement, a company spokesman said it would have to cut costs and bring production in line with falling demand.
It states: “Jaguar Land Rover made a profit in 2007 and continued to do so in the first half of 2008.
“However, the global meltdown, especially after July 2008 with vehicle financing and demands drying up, impacted the auto industry worldwide, including Jaguar Land Rover.
“In 2008 therefore, Land Rover sales fell considerably. However, Jaguar was able to maintain the sales level primarily on the back of a very strong consumer response to the newly launched XF sedan.
“The company has actively responded to this changed situation by taking a number of urgent and long term measures.
“These include cutting costs drastically and working on a plan of substantial cost reduction, aligning production with demand and tight control over cash flows. In addition, the company has introduced successfully new variants on both Jaguar and Land Rover brands, and is to unveil the all new XJ sedan shortly.”
Since completing the Jaguar Land Rover deal, Tata Motors has struggled for financing as the global credit crisis and economic downturn cut the availability of funds.
A rights share offer last year did not attract great interest, it deferred an overseas share issue and had to refinance a £1.7 billion bridge loan it had taken to buy the two marquee brands from Ford.
The firm, which has a line-up of the world’s cheapest car, the Nano, to some of most luxurious, said it had agreed to extend the final maturity of £600 illion by 18 months to end 2010.
Shares in the firm have more than doubled so far this year compared to a 51 per cent rise in the benchmark index. The shares fell by three-quarters in 2008.
