India's Tata Motors Q1 profit up 12.2%, misses forecasts

India's top vehicle maker Tata Motors on Thursday posted a 12.2 percent rise in quarterly profit, but missed forecasts, even as strong sales of British brands Jaguar and Land Rover offset weak local demand.

The auto giant reported consolidated net profit of 22.44 billion rupees ($406 million) for the three months to June, up from 20 billion rupees a year earlier.

The company, part of the salt-to-steel Tata conglomerate, however undershot analysts' expectations of profit of around 27 billion rupees.

Revenues for the first financial quarter climbed 30 percent to 431.7 billion rupees, the firm said.

Tata Motors, which also makes utility vehicles and the low-cost Nano car, said it suffered a foreign-exchange loss of 4.41 billion rupees in the quarter, around eight times more than the size of its currency loss of 570 million rupees a year earlier.

Jaguar and Land Rover have been key growth drivers for the Indian firm in recent quarters, where car sales are slowing due to a rise in raw material costs, vehicle prices, high fuel prices and interest rates.

Tata Motors car sales in India slid 9.9 percent from a year earlier to 62,619 units and its profit from standalone local operations nearly halved to 2.05 billion rupees, in the June-ended quarter.

The company said slowing local industrial growth, weak growth outlook and concerns over deregulation of government-controlled diesel prices will have an impact on overall demand for cars in India, in a presentation to reporters.

Tata Motors bought Jaguar and Land Rover from Ford Motor in 2008 for $2.3 billion as part of plans to expand its reach beyond Asia.

The deal vaulted Tata Motors from a commercial vehicle and small-car maker into a global player with luxury brands in its range of offerings.

Jaguar and Land Rover (JLR) sold 83,452 units in the last quarter, a jump of 34.4 percent from a year earlier.

Net revenue for the JLR brands rose 34.6 percent to 3.63 billion pounds ($5.64 billion) and net profit jumped to 236 million pounds.

The demand for JLR's luxury cars is strong in markets of North America, Russia and Brazil but demand in Europe remains weak.

"No one can predict what will happen in Europe," Ralf Speth, Jaguar Land Rover's chief executive told reporters on Thursday.

JLR has outlined a spend of 2 billion pounds in the financial fiscal year towards product development and increase in capacities, Speth said.

Sahil Kedia, analyst with Barclays Capital said that JLR's improved performance over previous few quarters is potentially at risk, as volume growth is starting to slow in Europe and China.

Tata Motors' domestic business profitability will remain under pressure throughout fiscal year 2012-13, due to weak macro-economic conditions, Kedia said in a note to investors.

Source: http://news.yahoo.com/indias-tata-motors-quarterly-profit-12-2-105528353--finance.html

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