FedEx Takes Earnings Hit Following Cyberattack
September 19 2017 - 6:10PM
Dow Jones News
By Ezequiel Minaya
FedEx Corp. said Tuesday that a cyberattack earlier this year
dented earnings in its first quarter by roughly a third, prompting
the package delivery giant to cut its profit forecast for the rest
of the fiscal year.
The company said that the June 27 cyberattack, which security
experts dubbed Petya, dragged on per-share earnings by 79 cents,
lowering its quarterly profit to $2.19 a share.
FedEx has said the hacked affected operations of its TNT Express
business, which has delivery operations in the Middle East and
Africa, Asia-Pacific, Europe and South America.
The world-wide operations of the business were "significantly
affected" during the fiscal first quarter ended Aug. 31, FedEx
said. And while most disrupted services have resumed with critical
systems restored, the company said TNT Express' volume, revenue and
profit remain below previous levels.
"The impact of the cyberattack on TNT Express and
lower-than-expected results at FedEx Ground reduced our
first-quarter earnings," said Alan B. Graf Jr., FedEx's chief
financial officer. "We are currently executing plans to mitigate
the full-year impact of these issues."
Hurricane Harvey also hurt earnings by 2 cents a share in the
first quarter, FedEx said.
The company said it now expects annual earnings stripped of
certain items to be between $12 and $12.80, down from its previous
estimate of between $13.20 and $14.
FedEx acquired TNT Express last year for $4.8 billion, the
largest acquisition in FedEx's history as part of a move to
accelerate its growth abroad. The Dutch company contributed 12% to
FedEx's top line in the prior fiscal year.
On Monday, FedEx said it would raise shipping rates beginning
Jan. 1. The shipping company said FedEx Freight, Express, Ground
and Home Delivery shipping rates in the U.S. would increase by an
average of 4.9%.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
September 19, 2017 17:55 ET (21:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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