Moody’s downgrades Jaguar Land Rover as it battles China slowdown
Embattled car giant Jaguar Land Rover (JLR) suffered a fresh blow today after credit rating agency Moody’s downgraded the firm and warned of a “negative outlook”.
Moody’s has reduced its corporate family rating to B1 from Ba3 and the probability of default rating to B1-PD from Ba3-PD. It also downgraded the instrument ratings on the bonds to B1 from Ba3.
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“The downgrade reflects Moody’s expectation that leverage will remain elevated and free cash flow negative for fiscal years 2020 and 2021 as Jaguar Land Rover seeks to turn around performance in China, executes its restructuring program and continues to invest in its future model line-up including electrification,” said Tobias Wagner, vice president and senior analyst at Moody’s.
“The negative outlook further reflects the challenge to turn around financial performance in a subdued market environment and as other manufacturers also prepare to launch electric vehicles. Risks regarding a potential no-deal Brexit or potential US tariffs also remain.”
It comes amid a torrid period for JLR, which last month posted an annual loss of £3.6bn after a hefty writedown to cover falling demand for newer models and diesel-powered cars.
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JLR has blamed the results on a slowdown in its key Chinese market, which prompted a 5.8 per cent decline in year-on-year retail sales to 578,915 vehicles.
The firm, which is owned by Indian giant Tata Motors, has already announced 4,800 job cuts and has embarked on a £2.5bn turnaround plan.