Press Report : Jaguar and Land Rover file £673.4m loss in UK

John Reed, Financial Times, 27th July, 2009

Jaguar and Land Rover’s core UK operations swung from a combined net profit of £641.5m in 2007 to a combined net loss of £673.4m ($1.1bn) last year. The “total recognised losses” at the two carmakers – including actuarial and other losses related to their pension schemes – reached nearly £1.2bn last year, according to accounts filed with Companies House last week.

News of the amount of money Jaguar Land Rover is losing in the UK comes as the carmakers and their owner, India’s Tata Motors, strive to conclude long-running and increasingly acrimonious talks with the British Government over short-term financing.

The Government says it is prepared to offer JLR a guarantee for a £175m commercial bridging loan, according to a person briefed on the talks. That is significantly less than Tata has been seeking. Tata is pushing for a 12-month term for the loan, while the Government wants six months.

Tata Motors had asked for loan guarantees for commercial financing worth about £500m and for a £340m European Investment Bank loan to help finance investments in lower-emission vehicles. The Indian group has pumped more than £1bn into JLR to cover losses since the financial crisis began. Tata bought the brands from Ford Motor for $2.3bn last year, just as sales of large and luxury vehicles began to plummet.

JLR said yesterday the accounts covered only its UK operations, and did not consolidate its businesses elsewhere. The group acknowledged that the figures “demonstrate the significant impact of the global recession and credit crunch on the automotive [industry] and the premium segment in particular.”

JLR’s talks with the Government on loans have dragged on since last October. Citigroup and Standard Chartered have been advising Tata in its efforts to raise financing. In the past week the Government has signalled its willingness to soften conditions it wanted attached to a loan guarantee, including board representation.

JLR said yesterday the accounts covered only its UK operations, and did not consolidate its businesses elsewhere. The group acknowledged that the figures “demonstrate the significant impact of the global recession and credit crunch on the automotive [industry] and the premium segment in particular.”

JLR said Jaguar’s 2007 results included a £308.7m gain from the sale of its shares in Aston Martin, another of Ford’s luxury brands, which was sold to Kuwaiti investors that year. Excluding exceptional items, Jaguar’s pre-tax loss of £38.3m in 2007 had narrowed slightly to a £34.1m loss last year, JLR said.

In its accounts, Land Rover said it had arranged borrowing facilities of £100m and $486m between January and May, $300m with banks and the rest with Tata-affiliated companies that had confirmed they would roll the facilities over into 2010 if needed. JLR said it had a letter of intent for another £100m for at least a year from a Tata-affiliated company.

[Source: Financial Times]

Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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