Cyberattack Drives Major Loss at Jaguar Land Rover
6-Week Shutdown Cuts Output and Forces Loan Guarantee
Key Takeaways:
- Jaguar Land Rover reported a £559 million ($735 million) quarterly loss after a cyberattack halted production for almost six weeks and forced the company to cut its full-year outlook.
- The shutdown contributed to a 24% revenue drop and £196 million in related costs, triggering a £1.5 billion U.K. loan guarantee and new £500 million supplier financing.
- JLR said production has returned to normal and its parent expects improving demand in India as the group manages tariff pressure and weaker sales in China.
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Jaguar Land Rover Automotive swung to a £559 million ($735 million) quarterly loss and slashed its guidance after a cyberattack temporarily halted production at the U.K.’s largest automaker.
The Range Rover maker said Nov. 14 its profit margin for the full year could now be entirely wiped out, having previously targeted a result as high as 7%. It now expects free cash burn of as much as £2.5 billion, after earlier aiming for little change.
The company, owned by India’s Tata Motors Passenger Vehicles Ltd., swung to a loss for the three months through September, in part due to £196 million of costs related to the hack.
The cyberattack forced JLR to halt production for almost six weeks, an unprecedented shutdown for such an incident. The fallout for JLR, already under pressure from higher U.S. tariffs, was so severe it dented the U.K. economy and forced the government to step in with a £1.5 billion emergency loan guarantee to help struggling suppliers.
Some operations slowly resumed last month, and production has “now returned to normal levels,” JLR said Nov. 14. The company also created a £500 million financing program for qualifying suppliers, allowing them to receive cash much earlier than normal.
(Bloomberg)
JLR’s revenue slumped 24% in the most recent quarter after wholesale volumes and retail sales fell. Its main sellers are the Range Rover and Defender sport utility vehicles. The company isno longer makingJaguar vehicles after embarking on a rebrand with plans for a new, fully electric lineup that’ssparked controversy.
It has been a “difficult period for the business,” said Tata Motors Chief Financial Officer P B Balaji, who’s soon taking over as JLR CEO from Adrian Mardell.
The hack was “like nothing else I’ve experienced,” said JLR’s Chief Financial Officer Richard Molyneux, who’s been in the industry for more than three decades. Tariffs are a shock which are easily understood and managed, but grappling with a cyberattack is “much more difficult,” he said on a call with reporters.
As well as tariffs, China remains a tough market. A recent change to the luxury tax in the country, which now applies to more JLR vehicles, “is a concern and it is impacting sales,” Molyneux said.
The cyberattack also took a toll on the parent company, with group revenue dropping 14% to 723.5 billion rupees ($8.2 billion). JLR makes up the majority of sales. One-time gains from theseparationof the commercial vehicles business helped net income jump to 761.7 billion rupees.
Respite in India
The local market provided some respite for JLR’s Indian parent. It’s now leaning on a pickup in demand in the country, where consumption tax cuts have unlocked pent-up buying during the festive season. The carmaker expects an all-round improvement in the coming months.
India passenger-vehicle sales for the quarterto 144,397 units. The period also marked its highest-ever electric-vehicle contribution, with those models accounting for 17% of total car sales.
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