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Cyber attack on TNT costs FedEx US$300m in lost operating income

FEDEX suffered a US$300 million loss in operating income during the first quarter of its financial year ended August 31 due to the Petya cyber attack, which hit its TNT Express business in June.

The loss of revenues went straight through to its profits due to the fixed-cost nature of the TNT network. The company also incurred incremental third-party costs related to the recovery effort, reported London's Air Cargo News.

FedEx executive vice president and chief financial officer Alan Graf was quoted as saying: "As the intra-European and domestic businesses recovered more quickly, the impact from lost revenues was and continues to be more heavily weighted towards our higher-yield international shipments, resulting in a more pronounced impact on profit.

"It is taking longer to restore our international business due to the complexity of clearance systems and business processes.

"We are now focussed on finalising the restoration of certain key customer specific specialised solutions in time for the peak season."

Looking ahead, Mr Graf said the company expected to experience ongoing but diminishing financial effects from the attack in the form of lower revenues and investments to improve IT infrastructure.

FedEx chief information officer Rob Carter added that the Petya cyber attack was the result of a nation state targeting Ukraine and companies that do business with the country. He said the attack was contained to TNT and that there was no loss of customer data to third parties.

He said he expected customer specific IT solutions to be restored by the end of September and that work was underway to replace TNT systems with those of FedEx.

Despite these issues, the overall company saw revenues for the quarter increase by four per cent year on year to $15.3 billion, while operating income fell by 12 per cent to $1.1 billion, and net income was down 17 per cent to $596 million.

The express segment, which includes TNT, saw revenues rise by two per cent to $8.6 billion, while operating income was down 29 per cent to $433 million.