Semiconductor supply issues put the breaks on Jaguar Land Rover

JLR

Semiconductor supply issues continue to affect Warwickshire-headquartered car company Jaguar Land Rover which has said that sales remain significantly constrained by chip shortages along with low inventories, with retail sales for the three months to 31 December 2021 (Q3) of 80,126 vehicles, down 13.6 per cent.

But wholesale volumes improved with production volumes up 41% to 72,184 units. While production and sales remain significantly constrained by semiconductor shortages, the company says it continues to see strong demand for its products with global retail orders at record levels.

The mix of electrified retail sales (BEV, PHEV and MHEV) increased to 69 per cent in Q3 compared to 53 per cent a year ago.

Demand also remains strong, with a record order book of almost 155,000 vehicles, up 30,000 units from Q2 reflecting strong demand for the New Range Rover, with deliveries for the model to start later in Q4 FY22.

For Q3, revenue was £4.7 billion, up 22 per cent from Q2 FY22.

Jaguar Land Rover ended the quarter with total cash and short-term investments of £4.5 billion, after completion of a £625 million 5-year amortising loan 80 per cent guaranteed by UK Export Finance and syndicated to 12 banks. In addition, the company has an undrawn revolving credit facility of £2.0 billion through July 2022 (£1.5 billion through March 2024).

Adrian Mardell, Jaguar Land Rover’s Chief Financial Officer, said: “It was encouraging to see a positive EBIT margin and cashflow, despite chip supply constraining wholesales to 69,000 units in the Quarter. It demonstrates the progress we’ve made in reducing the breakeven point in the business through mix optimisation and cost efficiencies so we will be well placed as supply and sales volumes improve.”

The Refocus transformation programme has delivered £1 billion of value in the first three quarters of FY22 through digital initiatives, market performance, cost efficiency and investment. The programme is now expected to achieve £1.4 billion of value in FY22, beating the original £1 billion target.

Semiconductor supply improved somewhat during Q3 primarily reflecting recovery from specific situations in Q2 such as Covid outbreaks in Southeast Asia as well as proactive engagement by the company. The semiconductor shortage is expected to continue through 2022 but is expected to gradually improve as capacity within the supply base increases, while the Company is also engaging with first-tier suppliers and directly with the chip manufacturers to secure supply longer- term.

Thierry Bolloré, Jaguar Land Rover’s Chief Executive Officer, said: “Whilst semiconductor supplies have continued to constrain sales this quarter, we continue to see very strong demand for our products underlining the desirability of our vehicles. The global order book is at record levels and has grown an incredible 30,000 units for the New Range Rover before deliveries even start this Quarter. We continue to execute our Reimagine strategy to realise the full potential of the business and create the next generation of the most desirable luxury vehicles for the most discerning of customers.”