TATA Motors-owned Jaguar Land Rover (JLR) on Monday posted an annual loss of 3.6 billion pounds, largely attributed to a nearly six per cent "weak" demand for its luxury car models in China.
Britain's largest carmaker, which has made a number of interventions over the threats posed by a hard Brexit on the automotive industry's profit margins, celebrated a return to profit in the fourth quarter of the 2018-19 financial year.
"Jaguar Land Rover has been one of the first companies in its sector to address the multiple headwinds simultaneously sweeping the automotive industry," said JLR CEO Ralf Speth.
"Jaguar Land Rover is focused on the future as we overcome the structural and cyclical issues that impacted our results in the past financial year. We will go forward as a transformed company that is leaner and fitter, building on the sustained investment of recent years in new products and the autonomous, connected, electric and shared technologies that will drive future demand," he said.
The annual figures were impacted by a 3.1 billion pounds write down in the third quarter to cover falling demand for newer models as well as for diesel-powered cars, announced previously by JLR.
The company said: "In the 12-month period, the company made a pre-tax loss of 358 million pounds before exceptional items, primarily as a result of lower full-year unit sales against the backdrop of a weaker China market."
"The previously-announced third quarter non-cash impairment charge of 3.1 billion pounds and the redundancy costs taken in the fourth quarter contributed to a full-year pre-tax loss of 3.6 billion pounds on revenues that declined 1.6 billion pounds year-on-year to 24.2 billion pounds."
The Tata Group company said it saw "encouraging" demand for its new models over the past year, including the Jaguar E-PACE sporty compact SUV, the Range Rover Velar mid-size SUV, the refreshed Range Rover and Range Rover Sport (both including plug-in hybrid options) and the all-electric Jaguar I-PACE.
This led to a lift in unit sales in the UK by 8.4 per cent and by 8.1 per cent in North America, helping JLR "outpace" industry growth in both markets.
Land Rover was also the fastest-growing automotive brand in the US and Jaguar sales rose sharply in Europe. Continued weakness in China, however, led to a 5.8 per cent decline year-on-year in retail sales to 578,915 vehicles.
"Jaguar Land Rover continues to maintain a strong balance sheet with 3.8 billion pounds of cash and an available 1.9 billion pounds undrawn credit facility, resulting in 5.7 billion pounds of total liquidity at the financial year-end," it said, adding that its Charge programme of transformation unveiled earlier had delivered 1.25 billion pounds of cash savings and cost efficiencies.
"We are taking concerted action to reduce complexity and to transform our business through cost and cash flow improvements. The company has returned to profitability in the fourth quarter and already delivered 1.25 billion pounds of efficiencies and savings," Speth added.
Product launches have included the new Jaguar XE, to be followed by the refreshed Discovery Sport and the new Land Rover Defender. JLR said it has also expanded its Ingenium engine family with the addition of a new high performance, low emissions six-cylinder petrol engine.
The company intends to make around 2.5 billion pounds of investment, working capital and profit improvements by March 2020 through its Charge transformation programme.
As part of the ongoing transformation programme, the company said it continued to invest in its manufacturing footprint.
JLR opened a new plant in Nitra, Slovakia producing the Land Rover Discovery and enhanced its state-of-the-art flexible manufacturing in Halewood, north-west England, for the new Range Rover Evoque.
Plans have been announced to assemble electric drive units and battery packs in the UK and invest in the production of the next generation of flagship Range Rover models at Solihull, in the West Midlands. Work is underway at Gaydon nearby to centralise Jaguar Land Rover's automotive design and product engineering activities.