Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Jaguar Land Rover (JLR) isn't broken, but the quarter was messy.
The luxury carmaker is trying to launch its next big product cycle while fighting supply shocks, weaker markets and the awkward business of winding down old Jaguars before the new ones arrive. Jaguar Land Rover reported a sharp fall in first-quarter profit for the three months to June 30. Revenue fell 9.6% year-over-year to £6 billion (about $8.2 billion) as wholesale volumes dropped 9.2%.
Profit before tax and exceptional items fell to £109 million from £351 million a year earlier, while profit after tax declined to £66 million from £248 million. Adjusted EBIT margin slipped to 2.8%, down from 4% in the same period last year. Free cash flow was negative £998 million, leaving JLR with £1.7 billion of cash and total liquidity of £5.9 billion, including undrawn credit lines.
The company blamed several moving parts. A fire at a major component supplier early in the quarter disrupted production, including Range Rover and Range Rover Sport output. Market disruption linked to the Middle East conflict also hit demand, while JLR continued the planned wind-down of outgoing Jaguar models ahead of the launch of the new Jaguar Type 01.
Range Rover, Range Rover Sport and Defender remained the core of the business, accounting for 80.8% of wholesale volumes, up from 77.2% a year earlier. Shares in Tata Motors Passenger Vehicles, JLR's owner, fell about 5% in Mumbai after the results. This quarter shows the uncomfortable middle phase of JLR's turnaround.
The company has strong brands, a premium customer base and a product pipeline that management clearly wants investors to focus on. Range Rover Electric, Range Rover Sport Electric, Range Rover GT and Jaguar Type 01 are all due in the coming months, and JLR says demand for its brands remains strong. But the numbers show how little margin for error the business has right now.
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