Economy

FedEx profits down after hurricane and cyber attack

FedEx profits down after hurricane and cyber attackā€

"The impact of the cyberattack on TNT Express and lower-than-expected results at FedEx Ground reduced our first-quarter earnings", said FedEx Chief Financial Officer Alan Graf. Most TNT Express services resumed during the quarter. and substantially all TNT Express critical operational systems have been restored. The company announced last month that it would not be charging customers an extra holiday shipping fee like it did previous year.

The Tennessee-based parcel delivery and trucking company reported net income of $596 million, or $2.19 per share, for the three months ending August 31, compared to net income of $715 million, or $2.65 per share, during the same time in 2016. That's down from $715 million, or $2.65 per share, in the same period a year ago.

The company said in its quarterly "8K" report to the U.S. Securities and Exchange Commission (SEC) that the impact of NotPetya on TNT Express N.V., a newly acquired subsidiary based in The Netherlands.

Fedex's first quarter revenue rose to US$15.3bn, up from US$14.7bn a year earlier, but was a shade below the consensus forecast for US$15.35bn. Wall Street analysts had expected earnings per share of US$3.09.

Shares of Fedex Corp., which are up about 16 percent so far this year, fell 1.7 percent to $212.40 in after-hours trading Tuesday.

FedEx did not have an insurance in place that covered the impact from the cyber attack.

FedEx said higher shipping rates across its operating units were more than offset by the cyber attack, costs related to the integration of its TNT unit, which it acquired a year ago for $4.8 billion, higher costs at its FedEx Ground unit, and a higher tax rate.

In pre-market NY trading, FedEx shares were 1.4% lower at US$213.00. "We are now executing plans to mitigate the full-year impact of these issues".

FedEx Express had revenues of $8.65 billion, with operating income of $521 million. Analysts forecast earnings of US$13.01 per share for the full year. That compared with consensus estimates of $3.09 in EPS and revenue of $15.35 billion. Revenue increased primarily due to average daily package volume growth of 4% and higher commercial service base rates, according to FedEx.

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



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