Economy

NotPetya cyber attack on TNT Express cost FedEx $300m

NotPetya cyber attack on TNT Express cost FedEx $300m”

Alan B. Graf, FedEx executive vice president and chief financial officer, commented: "The impact of the cyberattack on TNT Express and lower-than-expected results at FedEx Ground reduced our first quarter earnings". First-quarter revenue and operating income were slightly up from FY2017 at $4.64 billion and $626 million, respectively, but that growth resulted mainly from average daily package volume growth of 4 percent and higher base rates for FedEx's commercial service.

Shares of the Memphis, Tennessee-based company, often considered a bellwether for the US economy as are those of rival United Parcel Service Inc, dipped more than 2 percent in after-hours trading.

Excluding one-time items, the company reported earnings per share of $2.51. Wall Street analysts had expected earnings per share of US$3.09.

Excluding the impact of the cyber attack and Hurricane Harvey, FedEx said it would have posted EPS of $3.32, above analysts' expectations.

Parent group FedEx Corp said: "The worldwide operations of TNT Express were significantly affected during the first quarter by the June 27 NotPetya cyber attack".

FedEx did not have insurance protections in place that covered the cyber attack's impact and said the attack had caused the company to re-examine the cyber insurance market.

Most of the impact from the June "NotPetya" cyberattack on FedEx's TNT Express was lost revenue estimated by FedEx at about US$300 million of operating income.

FedEx lowered its 2018 adjusted full-year earnings per share forecast to a range of US$11.05 to US$11.85.

The company's operating margin fell to 7.3 percent from 8.6 percent.

In a statement released after-hours on Tuesday, the NYSE-listed firm said it earned US$596mln, or US$2.19 a share in the quarter, down from US$715mln, or US$2.65 a share at the same stage a year earlier.

In pre-market NY trading, FedEx shares were 1.4% lower at US$213.00.

Total group revenue was up to $15.3bn in the first quarter from $14.7bn past year.

"We are confident of our prospects for long-term profitable growth, and we reaffirm our commitment to improve operating income at the FedEx Express segment by $1.2 billion to $1.5 billion in fiscal 2020 versus fiscal 2017". The company will increase its shipping rates by 4.9 percent beginning on January 1, 2018, for its Express, Ground and Freight segments.

FedEx and rival UPS usually unveil price increases for the coming year around this time.



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