Jaguar gets a rough ride as profits fall

DAILY EXPRESS
By Philip Robinson

The deep scars inflicted on Jaguar by the stock market crash was unveiled yesterday. And it was shown just how tough life is for an exporter living with a strong pound. Profits for the first six months of this year were virtually halved. And chairman Sir John Egan, who powered the luxury car firm into shape, has warned full year figures will be significantly down.

Some analysts are already forecasting little more than break even next year. Almost £20 million was wiped off the value of the company, as the shares slid 11p to 253p. They were 165p when they came to market four years ago. Egan says a tenth of the 12,000 workforce would have to go in a drive for increased efficiency. The plan is to lift production from 4.6 cars per man year to the Daimler Benz standard of six.

Almost 90 per cent of Jag's production goes abroad. There is still a three-month waiting list for some models at home where 3,000 were sold in the first half of this year. And just under half the export sales totalling 23,000 cars went to the U.S. Jaguar was not thought particularly vulnerable to the wake of the Wall Street Crash, as the car is aimed more at the chief executive then the red-braced characters. At the back end of last year, when the dollar began to fall and Porsche was forced to raise prices.

Jaguar looked to be doing well. But as the pound strengthened in the first half of this year sales in the U.S. became less profitable. At the same time, Americans were shell-shocked and picky about their consumer spending habits. A strong pound knocked £30 million off Jaguar's half time figures. With the exchange rate on his side, Egan would have turned in a respectable profits increase. Instead the figures fell from £45.7 million to £22.5 million.

However the dividend has been maintained at an unchanged 3.7p, which probably checked any more dramatic fall in the share price. Egan is insulated from part of the harsh commercial world by the Government's golden share, making it takeover bid proof. But that expires at the end of 1990 and unless Egan can find a way of breaking the currency millstone over the next two years, he will not be short of talented rivals ready to step in and show they can.