Jaguar Land Rover boosts revenue but chip shortage hurts profits

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Land Rover has taken 30,000 orders for new Range Rover

JLR posted revenues of £4.7bn last quarter – a 22% increase – but has an order backlog of 155,000 vehicles

Jaguar Land Rover (JLR) reported a 22% uptick in revenue in the last financial quarter, citing an improvement in wholesale volumes and component supply over the second quarter, but the semiconductor shortage continues to restrict its profitability. 

In the three months to December 2021 (the third quarter of the fiscal year), JLR delivered 69,182 cars to dealers, an 8% increase on the previous quarter, and boosted output by 41% to 72,184 vehicles. 

Revenue climbed to £4.7 billion for the quarter, compared with £3.9bn in Q2, while its pre-tax margin increased to 1.4% and its free cashflow to £164 million.

However, it made a £9m pre-tax loss, contrasting heavily with a £439m pre-tax profit in the same period the year before. 

JLR enters the final financial quarter with £4.5bn in cash and short-term investments and notes that it has an undrawn revolving credit facility of £2bn available until July of this year, which will go down to £1.5bn through March 2024.

The company noted that the ongoing chip shortage – and the resultant shortfall in dealer stock – continues to restrict sales volumes.

Retail sales fell 13.6% last quarter to 80,126 vehicles, which is a more significant 36.6% down on the same period in 2020.

But supply of semiconductor chips did improve during the quarter, and JLR is “engaging with first-tier suppliers and directly with the chip manufacturers to secure supply longer-term”.

It therefore expects profits to improve further in this current quarter and hasn’t adjusted any of the medium or long-term financial targets outlined as part of CEO Thierry Bolloré’s bold Reimagine strategy.

Year on year, JLR increased the proportion of electrified vehicle retail sales, comprising mild-hybrids, plug-in hybrids and battery-electric vehicles, from 53% to 69%, and diversified its model mix, thanks to a 30% increase in wholesales of the new Range Rover.

The company currently has 155,000 orders to fulfil, an increase of 30,000 units over the second quarter, which it attributes to “strong demand for the new Range Rover” ahead of deliveries beginning in the final quarter of this year.

Bolloré said: “Whilst semiconductor supplies have continued to constrain sales this quarter, we continue to see very strong demand for our products underlining the desirability of our vehicles. The global order book is at record levels and has grown an incredible 30,000 units for the new Range Rover before deliveries even start this quarter. 

“We continue to execute our Reimagine strategy to realise the full potential of the business and create the next generation of the most desirable luxury vehicles for the most discerning of customers.”

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