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FedEx says TNT Systems may never fully recover from cyberattack

Monday, July 17, 2017 - 23:17

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Information systems in FedEx's TNT unit may never fully recover from a June cyberattack, and the revenue lost could have a material affect on financial results.

[DALLAS] Information systems in FedEx's TNT unit may never fully recover from a June cyberattack, and the revenue lost could have a material affect on financial results.

While TNT facilities are operating, customers still are experiencing "widespread" service and invoicing delays, FedEx said in a statement Monday.

A significant portion of TNT operations are using manual processes, the company said.

"We cannot yet estimate how long it will take to restore the systems that were impacted, and it is reasonably possible that TNT will be unable to fully restore all of the affected systems and recover all of the critical business data that was encrypted by the virus," the Memphis, Tennessee-based courier said.

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The Petya virus affected TNT through tax software used in the Ukraine and other operations haven't been affected by the attack, said FedEx, owner of the world's largest cargo airline. The company said it found no evidence of a data breach or data lost to third parties. 

The June cyberattack demanded US$300 in cryptocurrency to unlock infected computer networks. The virus spread throughout Europe before jumping to the US and eventually touching Asia and South America.

FedEx is still evaluating the financial effect and said it doesn't have insurance in place that would cover the cyberattack. It is too soon to quantify lost revenue from decreased shipping volumes and other costs of putting contingency plans and repairs in place, the company said.

"Clearly material near- / intermediate-term impact to financials are expected," Benjamin Hartford, an analyst at Robert W Baird & Co, said in a note.

"We take some solace that no data breach is known to have occurred, which should limit a longer-term lasting impact."

The shares fell 2.9 per cent to US$212.74 at 10.17am in New York, the second-sharpest decline in the S&P 500 Index.

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