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21 May 2019 by jbchevrel

That title could have suited well for a Brexit update, although ‘update’ implicitly suggests that something has changed. Jaguar Land Rover Automotive PLC (TTMTIN) reported q4 (talking fiscal year) revenues £7.1b so down a decent -6% YoY, with retail sales themselves down -8% YoY. The 5y CDS was little changed (+5bp on the day), as this was arguably quite in line with the market’s expectations. Similarly, EBITDA came at £696m, so down -24% YoY. The weak Chinese performance is the main factor to be blamed on these results. TTMTIN JV’s EBITDA margin printed at 5.4% this q4 vs 37.7% the q4 of last fiscal year. Can be called a squeeze. FCF came okay, at £1.4b, from £949m. It was optically pushed by working capital lower capital expenditure. Liquidity still looks solid for now, at £5.7b. Reported leverage is still north the target, at 2.3x. No real surprise on the guidance, although those are bad news. EBIT margin guided 3-4% with FCF improving. EBIT margin target still 7-9%. Leverage target still =2.0x. But management now expects to hit them in 2023 fiscal year. Delayed one year. Going forward, the focus will likely be on 1/ China-US relationships, 2/ potential M&A noise and 3/ Brexit. We are a tad below 600bp on the 5y vs a tad above 900bp back in February, on the occasion of the previous quarterly earning report.