Jaguar Land Rover will face a Coronavirus setback but it’s only temporary believe analysts
- In Q3FY20, JLR’s global revenue stood at £6.4 billion (₹1599.8 billion), up 2.8% year-on-year.
- Even though its January sales could take a hit because of coronavirus, analysts say that overall, JLR’s profitability is likely to sustain.
- Meanwhile, the company has pinned its hopes on two new models Land Rover Discovery Sport and Range Rover Evoque as well as the comeback of the iconic
In Q3FY20, JLR’s global revenue went up by 2.8% to £6.4 billion (₹1,599.8 billion).
That aided Tata Motors’ profitability as well. “JLR’s pre-tax profit margins continued to be in double-digits, boosted by higher share of the China region amid cost-cutting efforts delivering solid benefits,” said an Emkay report.
A sharp turnaround
But JLR’s China boost might be affected by the health crisis that the country is now facing. That would mean JLR’s fourth quarter sales could fall.
“The management has highlighted that the spread of CoronaVirus is likely to impact 4QFY20 China sales. Spread of the virus will also impact the launch of Discovery Sport (scheduled during Feb’20). In this backdrop we have reduced our FY20 JLR sales forecast,” said a report by JM Financial.
In spite of warnings and launch delays, analysts believe that JLR profitability – which saw a turnaround last quarter after many months of tepid growth - will hold on.
This hard-earned turnaround will not go away so easily. “Overall, JLR profitability is likely to sustain,” said J M Financial.
Defender to the rescue
Goldman Sachs too raised its outlook on the performance of JLR.
“We raise our volume forecasts for JLR by 1% and 3% for FY20 and FY21 respectively as we factor in better volume outlook for the Defender — we estimate 50,000 units in FY21 versus the previous high of 22,000 units in FY16,” a recent report from the global investment bank said.
The signs of thaw in US-China trade war are also making analysts see a positive impact. “JLR’s volume is showing signs of bottoming-out on a low base in China and the ramp-up of the recently upgraded Evoque model—the start of defender sales in 4QFY20 should provide a further boost,” a recent CLSA report said.
Two new models and a comeback
The company too pinned its hopes on two new models Land Rover Discovery Sport and Range Rover Evoque as well as the comeback of the iconic Defender. The company also admitted that 2019 has been a year of ups and downs.
“Over the last six months we saw a marked improvement in China, where intensive work with our retailers, combined with significant process and product improvements are starting to gain traction. Elsewhere, adverse market conditions continued to affect the industry, but encouragingly in North America we closed 2019 successfully with a new record year,” Felix Brautigam, chief commercial officer of JLR said during the December sales report.
Jaguar Land Rover is staring at a sales ‘hattrick’ it didn’t want
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