A cyber attack first detected by
Johnson Controls International plc at the end of September ended up having a $60 million impact to the company’s sales, according to the company’s latest earnings report.
Johnson Controls reported on Nov. 13 that it had experienced disruptions in portions of its IT infrastructure and applications due to a cyber attack. The attack involved the use of ransomware by a third party to access the company’s internal IT structure, according to an SEC filing.
The company filed another report with the SEC on Nov. 29 requesting additional time to compile its annual 10-K report. That report said the cybersecurity incident caused disruptions to “portions of the company’s systems that support or provide data used in financial reporting.”
“It did create significant distraction internally. It wasn’t one or two days, it actually was about three weeks, which was the better part of October,” said
George Oliver, chief executive officer of Johnson Controls. “While we’re able to quantify some of the impact I think it’s harder to put a number to the overall impact in October. Although we maintained operations, we weren’t necessarily operating at full efficiency.”
A large portion of the company’s costs, including business disruption, will be covered by insurance. The company has resumed normal operations following the cyber-attack.
“In quarter four, we believe that the impact (of the incident) to the top line was about 1%. It will be the same in quarter one,” said
Olivier Leonetti, chief financial officer of Johnson Controls.
For the full year, Johnson Controls grew sales by 6%. In the fourth quarter, sales increased by 3%. The company reported revenue of $6.91 billion in the fourth quarter.
The company is facing a $200 million free cash headwind in quarter one of fiscal 2024 due to delayed collections from the cyber incident. It is expected to catch up by the second quarter.
“From a bookings standpoint we were tracking, prior to the cyber incident, a little bit better and then with the outage, I think we somewhat slowed a bit in that last week,” said Oliver. “I think as we look at the first quarter and the year with the pipeline that we have, we’re going to see continued, strong order growth.”
Johnson Controls is a manufacturer of fire, HVAC and security equipment for buildings. It is technically based in Ireland, but its operational headquarters are in Glendale.
