NEW DELHI -- Tata Motors lowered its profit margin guidance for Jaguar Land Rover for the current fiscal year after JLR posted a 3.4 billion pound ($4.4 billion) quarterly loss.
Tata Motors expects the EBIT (earnings before interest and tax) margin for JLR for the fiscal year 2018-19 ending March 31 to be "marginally negative" compared with an earlier guidance of breaking even, Chief Financial Officer, PB Balaji said.
Troubles at JLR, which has been hit hard by U.S.-China trade tensions, low demand for diesel cars in Europe and Brexit worries, had tipped Tata into its first loss in three years in the quarter ended June 2018. Tata announced plans to turn around JLR but the slide in the unit's sales has continued with retail sales in China falling nearly 50 percent during the quarter ending Dec. 31.
"We are now taking clear and decisive actions in JLR to step up its competitiveness, reduce costs and improve cash flows and make the business fit for the future," Balaji told reporters on a conference call.
The automaker has taken steps to address the slide in sales in China by changing its strategy to focus on profits of dealers instead of sales and incentivizing retail sales over wholesale, Balaji said. "We see a gradual improvement in China going forward. We are happy to see our numbers stabilize now in terms of off take," he said.
Tata's loss came at 269.93 billion rupees ($3.78 billion) for the three months ended Dec. 31, compared with a profit of 11.99 billion rupees in the year-ago period. Revenue rose 5.8 percent to 762.65 billion rupees.
The company took a non-cash charge of 278.38 billion rupees ($3.9 billion) to cover the impairment at JLR in the three months to Dec. 31. Changes in market conditions, especially in China, technology disruptions and rising cost of debt resulted in the charge.
JLR, Britain's biggest automaker, is also facing disruption due to uncertainty over a Brexit deal and has decided to halt production for a couple of weeks in April.
Tata Motors has embarked on a plan at JLR to deliver cash savings of 2.5 billion pounds over 18 months to March 2020. Balaji said it has already achieved savings of 500 million pounds and is well on course to achieve the target.
Tata Motors has faced a decline in sales in India as well.