Tata Motors skids to first quarterly loss in three years

The Tata H5X is seen during a presentation at the 88th International Motor Show at Palexpo in Geneva, Switzerland, March 6, 2018. (Reuters/Pierre Albouy)
Updated 31 July 2018

Tata Motors skids to first quarterly loss in three years

  • India’s Tata Motors reported its first quarterly loss in nearly three years on Tuesday
  • British unit Jaguar Land Rover sold fewer of its luxury cars to dealerships in China and expenses rose.

NEW DELHI: India’s Tata Motors reported its first quarterly loss in nearly three years on Tuesday as its British unit Jaguar Land Rover sold fewer of its luxury cars to dealerships in China and expenses rose.
Dealers in China delayed purchases to benefit from an import duty cut that came into effect after the end of the quarter, the automaker said.
China decided to cut import tariffs for cars and car parts to 15 percent for most vehicles from 25 percent starting July 1, opening up greater access to the world’s largest auto market and helping to ease a recent flare-up in trade tensions with the United States. The move should in coming quarters provide a boost for overseas carmakers.
“We expect sales and financial results to improve over the remainder of the financial year ... with the new lower duties effective in China,” JLR CEO Ralf Speth said in Tata’s results statement.
Tata Motors’ Chief Financial Officer PB Balaji said headwinds facing JLR included its China sales levels as well as worries over Britain’s departure from the European Union and the diesel policy in Europe.
“China is probably the biggest one. We need to ensure China gets back to the growth rate that it was before the announcement of duty cuts,” Balaji told reporters.
In terms of Brexit, he said the company was preparing for worst-case scenarios, without elaborating, and was “gearing up for any eventuality that may be there.”
His comments came as the head of Britain’s car industry warned on Tuesday that if Britain were to leave the EU without a trade deal with the bloc that would raise costs and sow chaos for carmakers and consumers alike.
“Given these issues, we will remain focused on driving growth and simultaneously reducing costs and boosting operational efficiency and capability,” JLR’s Speth said.
Tata Motors reported a net loss of 19.02 billion rupees ($277 million) for its first quarter ended June 30, compared with a profit of 31.82 billion rupees a year earlier that included a 36.09 billion rupee gain from changes to the way JLR’s pension payments are calculated.
Even as JLR’s retail sales for the quarter rose 6 percent to 145,510 units helped by strong sales of its sport-utility vehicles — the Range Rover Velar and Jaguar E-Pace — quarterly revenue fell 6.7 percent because of lower wholesale orders.
The company reiterated its target of achieving between 4 percent and 7 percent growth in margins at JLR for the current fiscal year 2018-19.
Total expenses during the April-June quarter rose about 17 percent to 698.90 billion rupees.
To rein in costs, Tata Motors will restructure its business in Thailand. It plans to stop manufacturing vehicles in Thailand and will instead set up a distribution network to sell imported vehicles, Balaji said.
Tata Motors reported a quarterly profit of 11.88 billion rupees in its business in India excluding JLR, reversing a loss in the same period a year earlier and helped by higher sales of its passenger and commercial vehicles.


Central bankers face political shocks, and hope to avoid the worst

A man walks past the Federal Reserve Bank in Washington. (Reuters/File)
Updated 1 min 3 sec ago

Central bankers face political shocks, and hope to avoid the worst

  • During Fed conference, ‘some seemed intent on steering the wheel toward trouble’

JACKSON HOLE, WYOMING: Global central bank chiefs know their job is to keep the economy out of the ditch. What became clear at the US Federal Reserve’s central banking conference in Jackson Hole, Wyoming, over the past couple of days is that not only do other people hold the wheel, some seem intent on steering toward trouble.
“We are experiencing a series of major political shocks; we saw another example of that yesterday,” Reserve Bank of Australia Gov. Philip Lowe said on Saturday, a day after China and the US slapped more tariffs on each other’s goods and US President Donald Trump called on American companies to shut down their operations in the Asian nation.
As those political shocks slow growth, Lowe said in a panel discussion, “there is a strongly held view that the central bank should just fix the problem ... The reality is much more complicated,” and not something monetary policy can likely repair.
His comments spoke to an uncomfortable truth that hovered over an annual symposium where the mountain backdrop and two days of technical debate often seem distant from the world of realpolitik. Even as central bankers and economists referred to the deep connections that now tie the world’s economies together, a US-driven trade war seemed to be driving them apart and raising the specter of a broad global downturn.
Worse, it’s a downturn none of the central bankers seemed confident about how to fight — coming not from a business- or financial-cycle meltdown that they have a playbook to combat, but from political choices that threaten to crater business confidence.

HIGHLIGHTS

• Even as central bankers and economists referred to the deep connections that now tie the world’s economies together, a US-driven trade war seemed to be driving them apart and raising the specter of a broad global downturn.

• It’s a downturn none of the central bankers seemed confident about how to fight — coming not from a business — or financial-cycle meltdown that they have a playbook to combat, but from political choices that threaten to crater business confidence.

If that’s the problem, Lowe and others said, lower interest rates — something demanded by Trump to get an upper hand in the trade war with China — will do little to help.
“The problem is in the president of the United States,” former Fed Vice Chair Stanley Fischer said at a lunch event on Friday. “How the system is going to get around some of the sorts of things that have been done lately, including trying to destroy the global trading system, is very unclear. I have no idea how to deal with this.”
It was a rare calling out of Trump, though his presence infused other remarks. Fed Chair Jerome Powell, handpicked by Trump to run the central bank but now an object of the president’s ire, noted in his opening speech that the Fed had no chartbook for building a new global trading system.
‘Last moment’
Central banks have asked politicians for years to use fiscal policy more constructively and address structural problems plaguing economies.
What they’ve gotten instead is a fast multiplying set of risks, with the US-China trade war at the epicenter but also including the possibility of a disruptive British exit from the EU, an economic slowdown in Germany, a political collapse in Italy, rising political tensions in Hong Kong, and longstanding international institutions and agreements under pressure.
European Council President Donald Tusk described this weekend’s G7 leaders summit in Biarritz as a “last moment” for its members — the US, Britain, Germany, Japan, France, Italy and Canada — to restore unity.
Amidst all the tumult, and with interest rates across the globe already lower than they’ve been historically, monetary policy may be no match.
“There is not that much policy space and there are material risks at the moment that we all are trying to manage,” Bank of England Gov. Mark Carney said on Friday.