FedEx Struggles to Bounce Back From Cyberattack -- Update

Date : 18/07/2017 @ 06:16
Source : Dow Jones News
Stock : United Parcel Service, Inc. (UPS)
Quote : 112.94  -0.76 (-0.67%) @ 09:10
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FedEx Struggles to Bounce Back From Cyberattack -- Update

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By Imani Moise 

Customers waiting for packages abroad are experiencing significant delays as FedEx Corp. continues to reel from the effects of a June 27 cyberattack.

The delivery giant said Monday in a securities filing that the global cyberattack known as Petya significantly affected the operations of its TNT Express business, which has delivery operations in the Middle East and Africa, Asia-Pacific, Europe and South America.

FedEx said while TNT depots, hubs and facilities are operational, it has resorted to manual processes to facilitate a significant portion of operations and customer service functions. The company said it couldn't estimate when TNT services would be fully restored.

FedEx said the cyberattack will likely have a material financial impact on its operations and that lower volumes at TNT has already dented revenue. FedEx doesn't have cyber insurance or any other insurance to cover the attack.

United Parcel Service Inc. and the U.S. Postal Service didn't immediately respond to questions on Monday about whether they hold insurance policies to cover damage stemming from cyberattacks.

Many consumers have vented their frustrations on social media platforms about slow delivery times. On July 9, Twitter user @pieceofone complained about not receiving a package being delivered from China to Portugal. The tracking information began on June 24 with an estimated June 28 delivery date, but the user said he had not received the package, nor any further information from the company.

The Twitter user didn't immediately respond to interview requests. According to shipment tracking information through TNT's website, the package mentioned in the tweet arrived July 12. FedEx didn't immediately respond to comment about that customer's package delivery.

Last month's attack, which stemmed in part from an Ukrainian tax software product, hit a number of major global companies from Merck & Co. to PAO Rosneft. It also marks the second major cyberattack to hit FedEx this year.

In May, a large cyberattack known as WannaCry scrambled the company's computers. The courier said at the time it was experiencing interference with its Windows-based systems caused by malware. FedEx declined to say how widespread the problem was and whether deliveries were affected.

Shares in FedEx fell 1.6% to $215.46 in afternoon trading. The modest decline in shares is a "rational" response, Citi said in a research note. Although fiscal year 2018 earnings per share will likely be impacted from the cyberattack, "the longer-term story of growth for the Express segment and EPS growth story for the entire company remains," the report said.

FedEx stock is trading 0.5% higher than its June 28 closing price, the date the company first warned about service disruptions from the Petya attack.

FedEx acquired TNT Express BV 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.

--Cara Lombardo and Paul Ziobro contributed to this article.

Write to Imani Moise at imani.moise@wsj.com

 

(END) Dow Jones Newswires

July 17, 2017 16:01 ET (20:01 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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