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Jaguar-Land Rover Parent Warns Of Hit To Profit From China Virus Outbreak

A 24% rise in sales at Jaguar and Land Rover in China in the third quarter, however, helped the company beat profit expectations for the period.

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The coronavirus outbreak in China could hit profits at luxury car brands Jaguar and Land Rover, parent Tata Motors said on Thursday, the latest company to warn of an impact from the epidemic that has killed 170 people and forced businesses to suspend operations.

The Indian carmaker, which has made progress on its turnaround plan to improve JLR sales in key markets like China, said it expects profit margin of around 3% for fiscal 2020 at the unit but added that the outbreak could hurt its forecast.

The epidemic has also raised concerns that thousands of Chinese factory workers on extended Lunar New Year holidays may struggle to get back to work next week due to extensive travel restrictions.

Several companies including Tesla Inc, Apple and Starbucks have already warned of possible impact from the outbreak.

"We need to see when people come back and resume work, how soon they can replenish pipeline inventory," Chief Financial Officer PB Balaji said as the company reported its quarterly results.

A 24% rise in sales at Jaguar and Land Rover in China in the third quarter, however, helped the company beat profit expectations for the period.

Tata Motors said it expects capital spending at JLR to rise to 4 billion pounds ($5.26 billion) in 2021 from 3.6 billion pounds in 2020.

The carmaker reported net profit of 17.38 billion rupees ($245 million) in the third quarter ended Dec. 31, compared with a loss of 269.93 billion rupees a year earlier, when it booked an impairment charge related to the JLR unit.

Analysts, on average, were expecting a profit of 10.19 billion rupees, according to IBES data from Refinitiv.

Tata Motors last year mapped a revival plan for JLR and decided to cut around 10% of its workforce, following a drop in sales at the unit.

The company's overall revenue from operations fell 6.8% to 716.76 billion rupees in the quarter as its home market, India, faces an economic slowdown.

Tata Motors, like the rest of the auto industry in India, has been struggling with tighter credit and higher insurance costs, which have bruised demand and caused a pile-up of inventory.

(Reuters)


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