Blog: You, us, everyone

Jaguar offers investors a fascinating deleveraging story based on a range of attractive new vehicles (Range Rover, Defender), strong free cash flow, high margins, and debt reduction. The re-branding to JLR coincides with the implementation of the business plan. Being positioned in the luxury segment is a real catalyst vs mass market OEMs and their intermediate pricing strategy. JLRs has a relative pricing power relative to other OEMs which we think are more exposed to the headwinds in the EV market.

Achievements and key points of the Jaguar story:

• During the last half year earnings release, JLR increased its margin targets and forward guidance: EBIT margin was 7.3% in Q2 and 8.0% in H1; the target EBIT margin for FY24 was increased from 6%+ to around 8%
• Revenues of £6.9bn in Q2 and record first half revenue of £13.8bn, up 30% and 42% year-on-year respectively, driven by higher wholesales, better mix, cost reductions and investment in demand generation
• before tax and exceptional items was £442m in Q2 FY24, up over £600m year-on year; for H1, profit before tax and exceptional items was £877m, up over £1.5bn year-on year
• Free cash flow was £300m for the quarter and £751m for the first half of the financial year which is JLR’s best H1 cashflow on record
• Net debt stood at £2,249m, -£228m QoQ.
• The outlook remains positive for H2 given its high order book: JLR target a FY FCF of £2bn and a net debt below £1bn for the end of the fiscal year.
• EVs: JLR announced a partnership with its main shareholder Tata Motors through its subsidiary Tata Passenger Electric Mobility (TPEM) to share platforms and enter this segment with lower associated costs.
• JLR trading at only 1.5x EV/EBITDA