Carmaker Jaguar Land Rover is reporting a full-year pre-tax loss of £455m as it continues to grapple with computer chip shortages and takes a £43m hit from its Russian operations. Tony McDonough reports
Jaguar Land Rover (JLR) is reporting a pre-tax loss of £412m for the full year to March 31, 2022, as it continues to be held back by a global shortage of semiconductor chips.
JLR, which employs around 3,700 people at Halewood in Merseyside assembling the Land Rover Discovery Sport and Range Rover Evoque models, also said it had taken a £43m hit from the loss of sales to Russia.
In early March Britain’s largest carmaker said it was suspending sales of vehicles in Russia. This followed the Russian invasion of Ukraine, although JLR did not specifically link the decision to the conflict.
On Thursday the company said demand for its vehicles worldwide was strong but added the continuing shortage of semiconductor chips continued to constrain production. At one point last summer production was halted at Halewood due to the issue. JLR expects the shortage to continue into 2023.
In the final three months of its fiscal year, January, February and March 2022, JLR said it generated revenues of £4.8bn, up 1% on the previous quarter. However full-year revenues were 7% down to £18.3bn with the £455m pre-tax loss (including the exceptional charge for the Russian sales halt) set against a pre-tax profit of £662m for the previous year.
In its results statement, the company said: “While production and sales remain constrained by semiconductor shortages, resulting in a loss and cash outflow for the full year, the company continues to see strong demand for its products with global retail orders at record levels.
Wholesales (excluding the China joint venture) in the final quarter were 76,526 units, up 11% on the previous quarter with higher production volumes. Retail sales in the quarter were 79,008 vehicles, down 1% on the previous quarter as a consequence of constrained wholesales and low dealer inventories.
JLR said its mix of electrified retail sales (BEV, PHEV and MHEV) increased to 66% for the full year compared to 51% in the prior year. Wholesales for the full year were 294,182, down 15% compared to the previous year. Retail sales were 376,381, down 14%.
It added demand “remains strong” with the order bank growing to a new record 168,000 units at March 31, 2022. Orders for the New Range Rover have grown to 46,000, while demand for the Defender remains strong with 41,000 orders.
JLR ended the fiscal year with total cash and short-term investments of £4.4bn and total liquidity of £6.4bn, including the undrawn revolving credit facility of £2bn through July 2022 (£1.5bn through March 2024).
Adrian Mardell, Jaguar Land Rover’s chief financial officer, said: “Despite the ongoing semiconductor supply constraints limiting production, we have delivered a second successive quarter of positive cashflow demonstrating our continuing focus on revenue optimisation and cost efficiencies.
“Despite the present chip supply, inflation and other challenges, our lower breakeven point should position us well as volumes gradually recover.”