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Jaguar Land Rover steers back into profit

Land Rover Defender
Land Rover Defender

Jaguar Land Rover has returned to profit as Britain's biggest car maker starts to recover from coronavirus shutdowns and a cost-cutting drive kicks in.

It reported a pre-tax profit of £65m for the three months to the end of September, returning the company to the black after two quarters of losses.

However, the profit is just over a third of the £156m JLR posted a year ago, but better than the £413m and £501m losses for the two preceeding quarters.

Revenue jumped 52pc to £4.4bn compared with the previous three months, but was down 28.5pc on pre-coronavirus levels a year ago.

At 113,569 vehicles, car sales were up 53.3pc compared with the previous three months as buyers returned, but still almost 12pc down on the same point last year.

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While most markets continued to decline because of the pandemic, JLR said China was improving. It suffered a sales slowdown in the key market over recent years, but retail demand rose 14.6pc on a quarterly basis and was 3.7pc stronger year-on-year.

JLR's recently appointed chief executive Thierry Bollore
JLR's recently appointed chief executive Thierry Bollore

JLR sold 4,508 of its new Defender last month, with demand for the model seen as vital to JLR’s future.

Thierry Bolloré , who took over as chief executive from Sir Ralf Speth on September 10, said: “Although JLR is not immune to the headwinds impacting the global automotive industry, it has the foundations in place to generate long-term sustainable profitability.

“I am confident these qualities, and a strong product strategy with a focus on financial discipline, will equip Jaguar Land Rover to address challenges in the period ahead.”

Mr Bolloré is yet to set out his strategy for JLR, although he may scale back the range of vehicles to avoid overlaps between the Jaguar and Range Rover SUVs.

Analysts believe the similarities between the vehicles means the brands “cannibalise” each others' sales, as they compete for the same customers.

A cost-cutting programme introduced by Sir Ralf in 2019 delivered £600m of savings during the quarter, taking efficiencies in the year to date to £1.8bn.

All of JLR’s manufacturing facilities have now resumed production, with car plants at Solihull and Halewood and the engine factory in Wolverhampton running at two shifts, along with the site in Slovakia.

The Castle Bromwich plant that produces the company’s low-selling Jaguar saloons and F-Type sports cars continues to run at a lower pace, with plans to electrify models there delayed by Covid.

The company still has close to 3,000 staff on furlough, down from 20,000 at the peak of the pandemic.

Other manufacturers in the UK all have fewer than 100 staff still on the scheme.

JLR’s high levels of under-utilised workers has led to speculation that it is mulling further jobs cuts, having made thousands of staff and agency workers redundant even before coronavirus struck.