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Tata Motors-owned Jaguar Land Rover (JLR) has revised its earnings before interest and taxes (EBIT) margin guidance for the financial year 2025–26 to 5–7%, a sharp decline from its earlier forecast of 10%, citing mounting macroeconomic uncertainties. The revised outlook also falls below the 8.5% EBIT margin the company achieved in FY25.
The updated guidance comes at a time when the company is expecting an impact from trade tariffs introduced by the US, economic headwinds in China, and the accelerating shift towards battery electric vehicles.
In an investor presentation, JLR also cited evolving customer expectations, tightening regulations, and technological disruption as significant risks to its profitability. “These challenges all have the potential to impact EBIT; we are focusing on building our resilience,” the company stated.
JLR, which sources over a quarter of its global sales from the U.S., had temporarily halted shipments to the market following a 25% tariff on foreign-made vehicles, imposed under the administration of President Donald Trump. In response, the company is actively redirecting supply to more accessible markets in a bid to protect margins and sustain profitability.
The automaker remains in talks with both U.S. and UK governments regarding a bilateral trade deal signed in May, which allows the UK to export up to 100,000 vehicles annually to the U.S. at a reduced tariff of 10%. JLR is also reviewing its pricing strategy in the U.S. to help mitigate the financial impact while reaffirming its commitment to the key market.
In China, despite underperformance in FY25 due to broader sectoral challenges in premium vehicle demand, JLR continues to view the region as critical for future growth.
To regain momentum, JLR is pushing forward with tailored strategies including prioritising growth in the higher segment, retail network optimisation, brand building, and venturing into different segment with the introduction of Freelander in the second half of FY26.
In FY26, the luxury carmaker expects its free cash flow to be close to zero, compared to £1.5 billion reported in the year-ago period. It expects free cash flow to improve year-on-year for FY27 and FY28.
At the end of FY25, the company’s cash balance was £4.6 billion and net cash was £278 million, with gross debt of £4.4 billion. The company reported a revenue of £29 billion in FY25, flat on year, and full year profit before tax of £2.5 billion, up 15% on year.
Despite reduction in guidance for FY26, near zero free cash flows and macroeconomic uncertainties, the company said it remains committed to its reimagine investment plan of £18 billion over FY24-28, which will be funded from operating cashflows. The majority of this investment is expected to go towards engineering, facilities and tooling.
“Enterprise transformation is critical to continuing our Reimagine journey. We are revisiting our cost position in the short-term and strengthening our resilience for the long-term. Our imperative is to drive sustainable accretive value through a portfolio of focused transformation missions,” JLR Chief Transformation and Performance Officer John Beswick said.
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