Jaguar Land Rover takes huge hit
Jaguar Land Rover has announced a pre-tax loss of £3.4 billion ($A6.2 billion) for the final three months of 2018.
The significant loss includes a one-off £3.1 billion ($A5.7 billion) exceptional charge resulting from the British car maker deciding to adjust the value of its capitalized investments.
Jaguar Land Rover says half of the exceptional charge was due to an accounting acknowledgement that investments in machinery and plants were worth less than previous calculations suggested.
The remaining half is understood to come from a lowering in the value of past investments in product development and engineering – recognition from Jaguar Land Rover that it is unlikely to reclaim previous investments with future sales.
Financial analysts conclude the recognition that previous investment in diesel engines, which have underpinned Jaguar Land Rover sales in many key markets, will not be recouped due to a rapid decline in global diesel sales, most notably in Europe.
Excluding the one-off exceptional charge, Jaguar Land Rover posted a £273 million ($A499 million) pre-tax loss between October and December 2018, against revenues of £6.2 billion ($A11.3 billion).
Sales of Jaguar Land Rover cars declined by 9845 in the fourth quarter of 2018 compared to a year earlier at 144,602.
The £273 million ($A499 million) loss outside the exceptional charge compares to a £90 million ($A164 million) loss in the previous quarter of 2018, running from July until September.
Jaguar Land Rover attributed the drop in sales and profit to a decline in sales in the Chinese market, which negated a slight rise in sales in Europe and the US.
Jaguar Land Rover chairman Ralf Speth said the one-off exceptional charge made during the final quarter of 2018 was part of a recently announced transformation scheme that goes under the working title Charge and Accelerate. It has been conceived to modernize the company and streamline its operations. In announcing the loss on Thursday, Speth confirmed £500 million ($A913 million) of cash improvements had already been booked through measures introduced as part of the Charge and Accelerate scheme.
Kable is one of Europe's leading automotive journalists. The Aussie expat lives in Germany and has some of the world's most powerful executives on speed dial.