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This is an archive article published on July 29, 2023
Jaguar Land Rover looks to bring down debt by 60% to under £1 billion
The current quarter will also see a two-week planned production break across JLR’s UK plants on account of the annual summer holidays.
The reduction in JLR’s debt will be a huge positive for Tata Motors as the two brands make up 62% of the Mumbai-based company’s total net debt of `41,700 crore.(Representational Image)
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Jaguar Land Rover looks to bring down debt by 60% to under £1 billion
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With improving finances, British luxury brand Jaguar Land Rover has committed to bring down its net debt this year to under £1 billion from the current level of £2.5 billion, which will be its lowest in five years.
The ambitious target, which entails cutting down the net debt by a minimum of 60% from the current level of £2.5 billion (about `25,700 crore) at the end of the June quarter, will also translate to a higher cash flow besides repayments of existing borrowings.
The reduction in JLR’s debt will be a huge positive for Tata Motors as the two brands make up 62% of the Mumbai-based company’s total net debt of `41,700 crore. “Our commitment is to deliver £2 billion of cash and end the year with less than £1 billion in net debt,” Richard Molyneux, CFO, Jaguar Land Rover said in a post earnings call.
During the June quarter itself JLR cut down its debt by £0.5 billion quarter-on-quarter on higher cash flows after clocking £451 million in free cash flows during the same quarter with breakeven volumes at 300,000 units.
JLR ended the June quarter with a total debt of £6.48 billion and cash of £4 billion. The two brands, however, delivered a minor caution about the commitment stating that the same will be reviewed by the end of the September quarter.
“We will revisit commitments by the end of Q2, although I would say that if there are any adjustments to be made, they are more likely to be made on the P&L side than cash flow side,” Molyneux added.
The current quarter will also see a two-week planned production break across JLR’s UK plants on account of the annual summer holidays. This will have a direct bearing on the cash flow and profits to that extent, said senior executives of the company.
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“A €650 million debt matures in January 2024. The reality is that we do expect sufficient cash flow and liquidity that we could fund it out but we are thinking about what our funding and balance sheets strategy should be going forward,” Molyneux added. FE
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