Schaffer Faces Profit Pressure Amid Cyberattack and Infrastructure Slowdown
Schaffer Corporation’s first half FY26 profit fell sharply due to a Jaguar Land Rover cyberattack disrupting production, while its South Connect Jandakot property development breaks ground.
- Statutory net profit after tax down to $5.0 million from $12.7 million
- Automotive Leather profits impacted by two-month JLR production shutdown
- Delta division posts small loss amid reduced government infrastructure spending
- South Connect Jandakot development commences construction, boosting asset value
- Interim fully franked dividend maintained at $0.45 per share
Profit Decline Amid Operational Challenges
Schaffer Corporation Limited (ASX, SFC) reported a significant drop in its first half FY26 statutory net profit after tax, falling to $5.0 million from $12.7 million in the prior corresponding period. The decline was largely driven by disruptions in its Automotive Leather division, which saw profits nearly halve due to a cyberattack on Jaguar Land Rover (JLR) that halted production for two months.
The cyberattack, disclosed by JLR in early September 2025, forced a global shutdown of its supply chain and manufacturing facilities through September and October. This unprecedented interruption severely curtailed sales volumes for Schaffer’s Automotive Leather division during that period. Despite the setback, production resumed in November with sales volumes returning to normal, offering optimism for improved second half results.
Delta Division and Infrastructure Market Pressures
The Delta division, which focuses on civil infrastructure projects, recorded a small loss of $0.3 million compared to a $4.2 million profit in the previous year. This downturn was anticipated due to a marked reduction in West Australian government spending on large infrastructure projects, creating a highly competitive market with fewer available contracts and tighter margins. Signs of recovery are emerging, with private and commercial projects beginning to pick up, suggesting a near break-even performance may be achievable in the second half.
South Connect Jandakot, A Strategic Property Asset
On a brighter note, Schaffer’s property development arm is advancing with the South Connect Jandakot project. Construction of the first large warehouse building is set to commence in February 2026, marking a key milestone. This master-planned estate, strategically located in Perth’s industrial hub, offers approximately 34 hectares of developable land and is poised to benefit from historically low industrial vacancy rates in the region.
The valuation of South Connect Jandakot has increased slightly to $88.8 million, reflecting ongoing investment and development progress. The broader investment portfolio, valued at $219.0 million pre-tax net equity, saw a modest decrease from $227.3 million in June 2025, primarily due to dividend payments and timing delays in dividend receipts from Automotive Leather.
Dividend and Outlook
Despite the profit decline, the Board declared an interim fully franked dividend of $0.45 per share, consistent with the previous year’s interim and final dividends. This decision underscores confidence in the company’s financial position and future prospects.
Looking ahead, Schaffer expects Automotive Leather profits to improve in the second half of FY26 as JLR production normalises. The Delta division anticipates a break-even result, supported by a gradual recovery in infrastructure projects. However, the company acknowledges ongoing risks including global economic uncertainties, currency volatility, and geopolitical factors that could impact supply chains and sales volumes.
Bottom Line?
Schaffer’s recovery hinges on JLR’s production rebound and infrastructure market revival, with property development providing a steady growth pillar.
Questions in the middle?
- How quickly can Automotive Leather fully recover lost ground post-JLR cyberattack?
- Will West Australian infrastructure spending rebound sufficiently to boost Delta’s profitability?
- How will global economic and geopolitical risks affect Schaffer’s automotive and property divisions?
