JLR posts heavy losses as production returns to normal after cyber hack

Jaguar Land Rover has posted deep losses after the cyber attack that downed its global vehicle production for five weeks became ‘the single most financially damaging’ incident of its kind to ever hit Britain.

The UK’s largest car maker revealed that its annual profits are set to be wiped out after the hack in August halted assembly lines in the UK, Slovakia, Brazil and India.

It said production has now returned to normal as it shared losses of £485million for the three months to September 30, compared to a profit of £398million a year earlier.

This was due to costs of £196million related to the cyber attack and costs relating to job cuts.

Sales for the three months fell more than £1bn, by 24 per cent, to £4.9billion.

Departing chief executive Adrian Mardell – who will be replaced by new boss PB Balaji next week – said: ‘JLR has made strong progress in recovering its operations safely and at pace following the cyber incident.’

There have also been far-reaching economic side effects, as the attack was this week revealed to have pushed down GDP by 0.17 percentage points in September.

‘Single most financially damaging’ incident of its kind: Jaguar Land Rover posts heavy losses as production returns to normal after cyber hack 

JLR was forced to suspend production across all vehicle plants in the UK – as well as overseas – throughout September after shutting down its IT systems to mitigate the impact a cyber breach carried out by hackers on August 30

The first JLR workers returned to factory floors only on October 7 as part of a ‘phased restart’ to production

Mardell said that this news reinforced how ‘JLR is a really important part of the UK economy,’ adding that: ‘When we hurt, when our ecosystem hurts, it flows through.’

The group expects to have lost further sales over the current quarter due to the continued impact of the shutdown.

Mardell said it had been an ‘incredibly difficult time’ but that the business was ‘now back to doing what it does best, producing luxury British cars.’ 

He said the cyber attack was ‘like nothing else I’ve experienced in the auto industry’ and had been ‘a really massive learning curve’ for the group. 

JLR was forced to suspend production across all vehicle plants in the UK – as well as overseas – throughout September after shutting down its IT systems to mitigate the impact a cyber breach carried out by hackers on August 30.

Its assembly lines were downed on September 1 and the first workers returned to factory floors only on October 7 as part of a ‘phased restart’ to full production.

Industry figures showed the dramatic impact JLR’s production suspension had on the nation’s passenger car outputs during the month of September, which plunged by 27.1 per cent.

With the shortfall almost entirely JLR products with an average sale price of £70,000, the estimated value loss was around £1.33billion.

Mike Hawes, chief executive at the Society of Motor Manufacturers and Traders said in October that JLR’s unscheduled production stoppage had put the sector under ‘immense pressure’.

It affected over 5,000 organisations, and is estimated to have cost at least £1.9billion, according to the Cyber Monitoring Centre’s (CMC) analysis.

On September 28, the Government stepped in with a £1.5billion loan guarantee to support its supply chain to keep smaller businesses tied to JLR output afloat until the car maker fully restarted its assembly lines.

JLR said it had not experienced any stoppages due to a supply crunch concerning computer chips made by Chinese-owned Nexperia.

Some shipments of Nexperia’s chips have resumed after China recently eased an export ban – although European carmakers are still grappling with shortages. 

But Mardell added that ‘all companies are going to have to adapt’ ‘in a world which is prone to supply side shocks’ and said this could include ‘operating with slightly higher stock levels than people would like.’

Mardell said the situation appeared to be ‘moving the right way, but there could be issues as the supply chain may create shortages going forward.’