JLR to cut 1,000 jobs as carmaker reels from £500m Covid-19 hit
UK group expands cost-cutting programme by £1bn to £5bn after sales slump
Jaguar Land Rover will expand its multibillion pound cost cutting programme and plans to shed more than 1,000 UK jobs after a £500m hit from coronavirus knocked the carmaker to an annual loss.
Britain’s largest carmaker booked a £422m pre-tax loss in the year to March, with a £500m pre-tax loss in the final quarter as showrooms and factories across the world closed because of the pandemic.
The group plans to reduce up to 1,100 agency staff, or contractors, “in the coming months,” from a total UK workforce of 32,000, and on Monday raised its cost-cutting target by £1bn to £5bn by March 2021.
The latest cuts come on top of some 5,000 roles that JLR axed through a cost-cutting programme launched last year, and are the latest job losses to sweep the UK industry as carmakers from Bentley, Aston Martin and McLaren to Nissan make deep cuts amid falling sales.
JLR’s sales between January and March fell a third compared with a year earlier, while April sales were down 60 per cent.
It has begun reopening factories in the UK and Europe, although many are running at low capacity, while the Castle Bromwich Jaguar plant remains closed.
“The company plans to resume production gradually to meet recovering demand,” the group said, adding that the Solihull and Halewood plants are open, as well as its new Slovakian site and a contract manufacturing facility in Austria.
In China, which came out of lockdown as Europe and America began closing their economies in March, sales have recovered to previous levels. Sales in May were 4 per cent higher than a year earlier, JLR said.
Annual revenues to March fell 5 per cent to £23bn, with total car sales down 12 per cent to 508,659 vehicles.
In response to the falls, JLR cut research spending this coming year to £2.5bn, compared with £3.3bn in the year just finished.
The company had £3.7bn of cash at the end of March, as well as a £1.9bn credit facility, although the business spent £1.5bn during April and May and expects a cash outflow of around £2bn in the quarter to June.
This month JLR signed a deal with Chinese banks to raise £560m in a new loan facility, having been turned down by the Bank of England’s emergency funding scheme because of its junk-level credit rating.