• Thursday, March 28, 2024
businessday logo

BusinessDay

Fitch puts JLR rating under review citing Brexit

72t2g9ic_jaguar-land-rover-2018-sales_625x300_08_January_19

Fitch Ratings said it has placed Jaguar Land Rover’s (JLR) credit ratings under review for possible downgrades, citing increasing risks of a disorderly Brexit.

JLR had said in January that, there would be a week-long pause in production in April due to potential disruption from Brexit and trimmed production.

“The group has a significant trade imbalance and production bias to the UK and could be significantly affected by trade barriers and various logistic issues,” the credit rating agency said, placing JLR’s long-term ratings and senior obligations at ‘BB’ on “Watch Negative.”

Fitch said the review was prompted by uncertainty ahead of Brexit, which could lead to lower sales and higher costs that could strain the company’s liquidity position.

Recall that Prime Minister Theresa May’s Brexit deal was rejected in parliament last month and the government is trying to make changes to win the support of lawmakers even as the divorce date for Britain’s departure from the European Union looms less than two months away.

JLR, based in central England, is also planning to prune its workforce as it battles to return to profitability amid lower Chinese demand and a slump in European diesel sales.

The automaker and its parent Tata Motors had their credit pushed deeper into junk status in December by S&P Global as the agency cited weaker-than-expected profitability at the UK automaker.

 

Mike Ochonma