TNT cyber attack cuts FedEx profit by $300m

The NotPetya cyber attack on TNT resulted in a $300 million reduction in operating profit for FedEx Express in the first quarter.

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. Most TNT Express services resumed during the quarter and substantially all TNT Express critical operational systems have been restored. However, TNT Express volume, revenue and profit still remain below previous levels.”

Operating results in the FedEx Express division “declined due to an estimated $300 million impact from the cyber attack, which was partially offset by the benefits from revenue growth, lower incentive compensation accruals and on-going cost management initiatives. As-reported results include $88 million of TNT Express integration expenses,” the group said.

Operating income at FedEx Express fell from $610m in the first quarter of financial year 2017 to $433m in the first quarter of financial year 2018.

Revenue rose from $8.46bn to $8.65m.

Chief financial officer Alan Graf said: “The impact of the cyber attack on TNT Express and lower-than-expected results at FedEx Ground reduced our first quarter earnings. We are currently executing plans to mitigate the full-year impact of these issues.”

Total group revenue was up to $15.3bn in the first quarter from $14.7bn last year. However, operating income was down from $1.26bn to $1.12bn.

Chief executive officer Fred Smith said: “The first quarter posed significant operational challenges due to the TNT Express cyber attack and Hurricane Harvey, and I want to thank our team members for their extraordinary dedication and performance.

“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.”