Moody’s cut JLR’s outlook to negative after the cyberattack forced it to stop production and sales. It expects operations should return to normal after several months.
Moody’s Ratings said it has cut JLR ’s outlook to negative from positive after the cyberattack forced the company to stop production and sales, but it expects no lasting damage and operations should return to normal after several months.
Other experts were shocked by the damage from the cyberattack but agreed the company had the resources to survive.Tata Motors"The affirmation of JLR's Ba1 ratings reflects our view that the company will likely be able to withstand the impact of the cyberattack that has severely disrupted its operations over the past three weeks", said Timo Fittig, Assistant Vice President-Analyst at Moody's Ratings. “The change of the outlook to negative from positive reflects our expectation that the incident will have a sustained adverse impact on JLR’s credit metrics, and that a full recovery may take several months,” Fittig said.Professor David Bailey of the Birmingham Business School agreed that JLR will ride out the storm. “The outlook downgrade comes as no surprise. JLR hasn't made a single car in nearly a month after the catastrophic cyberattack and is burning through cash. It had £5 billion in liquidity back in the summer and will be able to weather this storm but has needed government support via a loan guarantee to quickly open up a commercial bank loan, the idea being to use this to prop up its supply chain. Parts of the latter are running out of cash,” Bailey said.The British government announced at the weekend that it would guarantee a £1.5 billion loan to ease the strain on suppliers."I concur with Moody's assessment that JLR will likely be able to withstand this, but that full recovery will take several months. I'm of the view that JLR could go several months before needing refinancing but that parts of the supply chain are running out of cash hence the need for government action,” Bailey said. British automotive analyst Dr Charles Tennant said JLR hasn’t produced a vehicle since the end of August. 30,000 vehicles should have been produced, valued at £2.2 billion and £120 million in lost profits. “JLR can withstand this shock as they made £2.5 billion in profits last year but for the supply chain is a different story where they are haemorrhaging cash and laying off workers at an alarming rate. JLR had no choice but to shut down their IT systems as soon as the hack was discovered and are taking a controlled and safe path back to normal operations, but it has been a highly complex problem to solve.” “They have so far got their IT systems back up and running for supplier invoicing, parts ordering, and wholesaling vehicles into the dealer network and are planning to restart some production this week. This is a wake-up call for U.K. businesses to improve their cyber security and resilience against these type of IT system attacks,” Tennant said.Moody’s said it will take several weeks for JLR to resume operations. It will be difficult for JLR to recover from the financial impact of the shutdown over the remaining six months of the financial year ending March 31. There will be a substantial loss of revenue and profit. “For financial year 2026, we now forecast JLR's revenue to decline to below £25 billion , down 14% year-on-year, further exacerbated by the production outage which is unlikely to be fully recovered. The additional cost occurred as a result of the cyber incident could lead to a decline in Moody's-adjusted EBITDA to well below £1 billion , leading to a temporary spike in leverage.” “As such, even if JLR's operations will return back to normal within the next weeks, we expect credit metrics to remain weakened at least until early in financial year 2027,” Moody’s said.
Moody's Ratings Cyberattack David Bailey Charles Tennant Tata Motors
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