Major car retailer Vertu says it could suffer up to a £5.5m hit on profits due to the fallout from Jaguar Land Rover's (JLR) forced factory shutdown. The Gateshead-based showroom operator said its adjusted pre-tax profit in September was impacted by £2m and that the full extent of the shock would depend on when JLR was back to normal trading.
Vertu operates 10 JLR dealership among its network of 191 sites, with some small scale acquisitions due in the coming months. The high profile cyber attack on JLR has halted production and caused problems in its supply chain, with Vertu saying it had been unable to register or deliver new vehicles in the key plate change month of September.
Bosses said the outage also impacted aftersales operations with diagnostics and parts ordering systems offline. The retailer is said it was assessing the extent of losses and that it has a business interruption insurance in place which includes third party system outages.
Investors on the London Stock Exchange were told that, excluding the impact of the JLR shutdown, its full year, underlying pre-tax profits are expected to be in line with expectations of between £26.5m to £27.5m. In the six months to the end of August, it saw revenue grow to £2.51bn, compared with £2.47bn in the same period last year. Adjusted operating profit across the half year was down 6.1% to £31m.
Like-for-like new retail car sales grew 1.8% including "significant" sales of battery electric vehicles, supported by Government grants and increased discounts. Speaking to BusinessLive, Vertu chief executive Robert Forrester said there was "no way at all that the industry will hit any of the Government's targets between now and 2030" which would create continued pressure.
Mr Forrester said that in the face of a £10m cost caused by tax rises introduced in April, he was proud of the way the business had become more efficient, including through increased use of artificial intelligence. Board members said they remained cautious due to weak consumer and business confidence, as well as wider macroeconomic uncertainty - particularly ahead of the Autumn Statement in November.
Mr Forrester said: "The group has performed well despite continued upheaval in the new car market due to the Government's policy to electrify the Ƶ car parc. We have delivered market share gains in every area as the group trades under the single Vertu brand for the first time.
"We were particularly pleased to see further growth in our BEV retail market share. Our high-margin aftersales and used car channels delivered another good performance.
"It was disappointing for the industry to face major disruption across the JLR network following a cyber-attack on the Manufacturer during the key plate-change month of September. I was in awe of the way that our teams reacted to the disruption on customers and to minimise the impact in our 10 JLR dealerships, with the full support of JLR which has responded admirably.
"Whilst the situation is fluid, it appears to be easing in recent days. We are currently working with our insurance brokers and insurers to assess a potential claim under our insurance policy, which extends to the impact of third-party systems outages.
"The group is very clear of its strategic priorities including further growth in the number of sales outlets, significant control of costs and the continued share buyback programme to drive shareholder value creation."
JLR itself has revealed a sharp drop in sales over recent months as it prepares to restart production across its Ƶ sites after weeks of disruption following a cyber attack.
The British carmaker said it had been a “challenging quarter” as it also grappled with the impact of higher US tariffs. It revealed sales fell by 17.1% to 85,495 units between July and September, compared with the same period a year ago, with Ƶ sales dropping by nearly a third.
The company is set to restart manufacturing operations today at its engine plant in Wolverhampton and its battery assembly centre in Coleshill, Birmingham. It will also restart the firm’s stamping operations in Castle Bromwich, Halewood in Merseyside, and Solihull, on Wednesday, together with key areas of its Solihull vehicle production plant, such as its body shop, paint shop and its logistics operations centre, which feed parts to the group’s global manufacturing sites.
