UK manufacturing giant Morgan Advanced Materials confirmed some of its sites are still using manual processes as it struggles to restore its systems.
The company announced it was experiencing a “cyber security incident” on 10 January 2023 but did not offer many details about the nature of it.
Its wording of the event was strongly reminiscent of that used in typical ransomware attack disclosures, but the company has never confirmed if this is true.
Morgan Advanced Materials said at the time that it launched an investigation, engaged third-party specialists, and enacted its incident response plan.
In a regulatory notice published on Friday, it said all sites are currently operational but are not fully restored.
“Morgan experienced a cyber security incident in January 2023, having detected unauthorized activity on the network. Immediate steps were taken to contain the incident, launch incident response plans, engage specialist support services, and embark on restoring systems.
“All manufacturing sites are operational, although some continue to use manual processes as work continues to restore their systems.”
A comprehensive guide for your Customer Identity Maturity journey
DOWNLOAD FOR FREE
The company also said it expects recovery costs to reach “around £15 million”. These include “system recovery and specialist support costs, including IT asset impairment charges of £0.7 million”.
The latest expected cost of recovery is £3 million more than the £12 million sum it originally forecasted back in February.
Published in a regulatory update for investors, the admission caused the company’s shares to drop more than 5%.
In the same investor update, it also said “a small number of systems have proven irrecoverable and so we are accelerating the implementation of a new cloud-based ERP solution at the affected sites”.
“Whilst demand has remained strong during January, we are experiencing production inefficiency during the recovery period which, based on current estimates, could lead to adjusted operating profit for FY2023 being approximately 10% to 15% below our previous expectations.”
The company’s full-year results for the period ending 31 December 2022 revealed revenue and profit gains over 2021’s results.
Morgan generated £1.1 billion in revenue last year, up from £950 million the year before, and recorded £151 million in profit - also up from 2021’s figure of £124.5 million.
On 2023’s results, the company said it expects to return to growth in the second half of the year, with the first half to be in line with 2022’s results, despite the expense of recovering from the cyber attack.
“Demand has remained robust coming into this year, particularly from our faster-growing markets,” said Pete Raby, CEO at Morgan Advanced Materials.
“As previously announced, the cyber event we experienced in January has impacted sales and profitability in the short term, but our recovery is on track. We are also taking the opportunity to accelerate the modernization of our IT infrastructure.”
In February’s regulatory notice, Morgan said it expected its yearly profit to be cut by 10-15% as a result of the IT recovery, and its latest filing said its “outlook for full-year adjusted operating profit is unchanged from our guidance of 7 February 2023”.
