JLR brings back 85% furloughed workforce

Mumbai: Jaguar Land Rover has called back to work as much as 85% of its more than 20,000 workers furloughed in the UK, as the Tata Motors-owned British luxury-vehicle maker steps up production amid a revival in demand in most of its markets.

Sales in the July-September quarter were 50% more than the previous three months, when most markets around the world were in a lockdown. Its UK factories are now working on two shifts.

The return of the workforce will help the company avail of more benefits from the UK government’s job retention bonus — if it is able to keep all the 20,000 workers who were furloughed. The government’s grant could now be around 20 million pounds under the new furloughed scheme, where it provides two-thirds of each employee’s salary with a cap of 2,100 pounds a month. The scheme will begin on November 1 and be available for six months.

JLR’s management in its June-quarter results conference said the furlough offset money would come down from around 141 million pounds in the fiscal first quarter. The company at the time said its workers on furlough had reduced to 10,000 in July from double that in April.

The improving volume outlook will ease pressure on the financial health of the UK’s largest carmaker.

Retail sales in the UK, Europe and North America grew 231%, 78% and 21.3% in the September quarter from the previous three months. But the decline in year-over-year volume will weigh on the near-term financial performance.

In the September quarter, JLR is expected to post a loss of 150-200 million pounds.

Total salary outgo for JLR was 2.54 billion pounds in FY20 when and accounted for about 11.17% of revenue. The average employee salary was 64,543.7 pounds, nearly unchanged from a year earlier.

It had a headcount of 39,787 at the end of FY20, compared with 44,101 in the FY19, according to its annual report. Of these, half the employees were employed in manufacturing roles, 23% in research & development and the balance in other functions.

JLR accounts for more than 80% of Tata Motors’ consolidated revenue and its performance heavily weighs on the parent’s stock. Thanks to its strong recovery in various markets, the share price of Tata Motors gained 36% between July and September.

While 17,000 of the furloughed workers have resumed work, the company has come out with a voluntary redundancy scheme for a small portion of the workforce as part of a cost-cutting exercise.

A Tata Motors spokesperson said the company continued to bring furloughed employees back steadily. From a peak of around 20,000 employees on furlough, this had been reduced to currently 3,000 employees and that figure will continue to reduce week by week between now and when the UK furlough scheme ends at the end of October, the spokesperson said.

“As the UK government’s furlough scheme comes to an end, Jaguar Land Rover is implementing a very small targeted voluntary redundancy programme for some management and salaried employees currently on furlough. This is a prudent step given the challenges facing the global automotive industry in which we compete, giving these employees the choice to consider new opportunities outside of the company having been out of the business for more than seven months,” added the spokesperson.

Thanks to the strong recovery, the company ended September with about 3 billion pounds of cash and short-term deposits, up by 300 million pounds. This primarily reflected a positive free cash flow, the company said. Total liquidity was about 5 billion pounds, including 1.9 billion pounds of undrawn revolving credit facility.

The company said it was not possible to comment on the final numbers that might be involved in the voluntary redundancy programme, as the consultation process was in its early stages and would be subject to the level of employee interest in the scheme.

“Our business is gradually returning to normal, with 99% of our global retailers now fully or partially open, all our manufacturing plants operational with robust Covid-secure measures in place. Sales for July to September were over 50% up on the preceding quarter. Industry forecasts are for continued gradual recovery in demand globally,” the spokesperson said.

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