FedEx Q1 figures hit by June cyber attack and hurricane

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FedEx reported yesterday that the 27 June NotPetya virus cyber attack on TNT Express wiped $300 million from its quarterly profit, while Hurricane Harvey also impacted operations.

FedEx said the worldwide operations of TNT Express were “significantly affected” during Q1 cyber attack, but most TNT services resumed during the quarter and all TNT Express critical operational systems have been restored. However, TNT Express volume, revenue and profit still remain below previous levels.

The express freight firm revealed the news in its first quarter (Q1) financial figures, which ended on 31 August and reported net income for Q1 of $596 million, down more than 16 per cent from last year’s $715 million. Overall revenue rose to $15.3 billion from $14.7 billion from the same period last year.

FedEx chairman and chief executive officer, Frederick Smith says: “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.

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“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.”

FedEx also 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, higher costs at its FedEx ground, and a higher tax rate.

As for the future outlook, FedEx executive vice president and chief financial officer, Alan Graf says: “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.”

FedEx also said on Monday it will increase its Express, Ground, and Home Delivery shipping rates by an average of 4.9 per cent from 1 January.