Jaguar Land Rover’s Cash Flow Expectations Hit by Chips Fallout

Jaguar Land Rover, the luxury British car brand owned by India’s Tata Motors Ltd., expects free cash flow of around £500 million for the full financial year.

(Bloomberg) — Jaguar Land Rover, the luxury British car brand owned by India’s Tata Motors Ltd., expects free cash flow of around £500 million for the full financial year.

While that’s half the forecast of more than £1 billion it gave back in 2022, it significantly exceeds a more recent estimate as supply chain snarls that dented business in the second quarter eased.

JLR missed expectations in the second quarter but has beaten its second-half guidance for both volume and cash flow versus what was forecast in November of 2022 as the supply of chips gradually improved, a spokesperson said via email.

The global semiconductor shortage has undermined the luxury carmaker’s turnaround as it struggles to work through a debt reduction plan. While JLR has ramped up production of its Range Rover and Range Rover Sport models, it’s still feeling the effects from a chip dearth that has beset the entire industry over the past two years.

Read more: Jaguar Land Rover Risks Missing Debt Cut Goal on Chip Crisis

In November, the loss-making manufacturer said it’s cutting output of the Range Rover Velar and Jaguar F-Pace models made in the UK to focus on on higher-margin models.

Tata Motors also said Thursday, when it issued fourth-quarter sales guidance, that JLR’s preliminary estimated cash balance was more than £3.7 billion as of March 31 while net debt was around £3 billion.

JLR’s retail sales rose 30% from a year earlier to 102,889 units in the fourth quarter while wholesales, excluding its joint venture in China, increased 24% year-on-year to 94,649 units. The automaker’s order book remains strong at 200,000 units, Tata Motors said.

–With assistance from Siddharth Philip.

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