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China sales help Jaguar Land Rover to £156m pre-tax profit

Revenues rise 8% year-on-year despite overall drop in sales as carmaker tackles supply issues
  
  

Vehicles being checked on the production line at the Jaguar Land Rover factory in Solihull.
Vehicles on the production line at the Jaguar Land Rover factory in Solihull. Photograph: Leon Neal/Getty Images

A sales rebound in China helped Britain’s largest carmaker, Jaguar Land Rover, return to the black in the three months to September.

The Warwickshire-based manufacturer on Friday reported a pre-tax profit of £156m in its second financial quarter, compared to a loss of £90m during the same period last year.

JLR endured a difficult start to the year, with industry-wide uncertainty over a backlash against harmful emissions from diesel vehicles such as the heavy SUVs manufactured by Land Rover. At the same time, its production schedules have been disrupted by preparations for a possible no-deal Brexit.

However, revenues rose 8% year-on-year to £6.1bn in the second quarter, driven mainly by a 24.3% year-on-year increase in Chinese sales, after JLR worked to improve its relations with dealers and to solve supply issues to its factory in Changshu, eastern China.

The stronger performance in JLR’s key growth market made up for weaker sales elsewhere. Overall sales fell 0.7%, with the UK market down by 5% and sales outside Europe, North America and China down by a fifth.

The difficult conditions in China prompted the company to make 4,500 people redundant in January as part of a £2.5bn cost-cutting programme, dubbed “project charge”. It had achieved £2.2bn of savings at the end of September.

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The carmaker, which is owned by the Indian conglomerate Tata, then wrote down the value of its assets by £3.1bn in February, pushing it to its largest ever quarterly loss. Tata last week denied it was looking to sell the carmaker, although it said it would consider partnerships similar to that struck with BMW to develop electric vehicle technology.

The company’s factories are scheduled to close for a week in November in case of disruption to the supply of the 20m parts it needs every day, with a small possibility remaining of a no-deal Brexit on 31 October.

However, Ralf Speth, JLR’s chief executive, said on Friday that the company had weathered “challenging circumstances” in the past year and was now on a “product offensive”, including its redesigned Land Rover Defender.

“Jaguar Land Rover has returned to profitability and revenue growth,” he said. “We were one of the first companies in our sector to address the challenges facing our industry.”

 

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