FedEx cut its annual profit forecast, citing the $300m cost of a June cyberattack on its TNT Express unit.
The courier now expects to earn no more than $12.80 a share in the fiscal year ending in May after excluding certain items, FedEx said in a statement on Tuesday. That’s down from an original projection of as much as $14 and less than the $13.10 average of analysts’ estimates compiled by Bloomberg.
The global cyberattack in late June struck as the company was stepping up spending to handle more packages from the expansion of online shopping. FedEx also said results at its ground-shipment unit weighed on results, as did Hurricane Harvey, which caused flooding along the US Gulf Coast.
“The first quarter posed significant operational challenges due to the TNT Express cyberattack and Hurricane Harvey,” CEO Fred Smith said in the statement.
FedEx had no insurance to cover the attack, which forced TNT to manually process some transactions.
FedEx fell 2% to $211.61 after the close of regular trading in New York.
Global operations outside the TNT unit weren’t affected by the virus, which entered the unit’s systems through tax software used in the Ukraine. FedEx said it found no evidence of a data breach or information lost to third parties.
The shipper also was among companies hit by the WannaCry ransomware in May, although it said that attack didn’t cause a material disruption to its systems or raise operating costs. Companies around the world struggled to retake control of their networks after the intrusions, which cost them hundreds of millions in potential revenue.
FedEx acquired Dutch shipping company TNT Express for $4.8bn last year to gain an extensive parcel delivery system in Europe to compete with United Parcel Service and Deutsche Post’s DHL. The just-completed quarter was the first in which FedEx reported TNT results as part of its Express division. TNT primarily serves industrial, automotive, high-tech and health-care industries.
FedEx already had planned a 16% expansion in capital spending this year to $5.9bn, after delaying some projects at FedEx Ground to help it process more of the growing number of e-commerce shipments and to boost margins. Deliveries to homes generally have lower yields than to businesses because fewer items are delivered at each stop.
The shipper also said its first quarter profit fell to $2.51 a share, compared with analysts’ average expectation of $3. Sales in the period ended August 31 rose 4% to $15.3bn, compared with the average estimate of $15.35bn.
By Mary Schlangenstein for Fin24
WH Smith has reported a 5% year-on-year increase in profits at its high street stores for the 12 months ended 31 August, helped by strong stationery sales.
WH Smith chief executive Stephen Clarke said sales were boosted by the success of the Zoella Book Club – launched by millionaire vlogger Zoe Sugg in June.
The firm’s overall profits were up by 8% to £131-million.
“We have delivered a good performance across the group, with earnings up 10%,” Clarke said in a statement.
“Looking ahead, we will continue to focus on profitable growth, cash generation and investing in new opportunities.
“While the economic environment is uncertain, we are well positioned for the current year and beyond.”
WH Smith announced an 11% increase in ordinary dividends to 43.9p per share and added that it would buy back £50-million worth of its shares.
“The proposed increase in final dividend reflects the board’s confidence in the future prospects of the group, the strong cash generative nature of the business, and our progressive dividend policy,” the firm said.
Total group sales increased by 3% to £1,21-billion during the 12-month period.
By Karthick Arvinth for www.ibtimes.co.uk
Sappi, the world’s biggest producer of dissolving wood pulp, said first-quarter profit more than tripled after higher prices for the cotton substitute helped offset the effects of a drought in South Africa on volumes.
Net income for the three months through December increased to $75-million, compared with $24-million a year earlier, the Johannesburg-based company said in a statement on Wednesday. Revenue declined 6,8% to $1,28-billion and net debt was $1.73 billion, compared with the $1.77 billion the company reported three months ago.
Sappi is diversifying its production, as a global shift to digital publishing and advertising dampens the demand outlook for its traditional glossy paper business, and is also seeking to reduce costs and cut debt. The company expects “strong growth” in earnings in the current financial year compared with 2015 and sees net debt falling further during the year, it said in the statement.
“The successful result was attributable to higher graphic paper volumes, improved pricing for dissolving wood pulp and cost containment initiatives,” the company said. “The strategy to reposition Sappi into a profitable and cash-generative diversified woodfibre group is well on track.”
Sappi’s shares closed 2.09 lower to R65.60 in Johannesburg. The stock has increased 37% in the past 12 months, compared with a 7% decline in the FTSE/JSE Africa All-Share Index.
The depreciation of the rand, which declined 10% relative to the dollar during the quarter, contributes positively to Sappi’s profit margin for dissolving wood pulp, which it exports from South African mills. Sappi’s operations in its home country, which include paper and packaging manufacturing as well as pulp, account for about half of earnings before interest, taxes, depreciation and amortisation
Low rainfall in South Africa, which dropped last year to the lowest since records began in 1904, had a negative effect of $6-million in the quarter, Sappi said. The company needs water for its manufacturing process, and low rainfall also slows tree growth.
Although dollar prices for dissolving wood pulp have come under some pressure since December because of lower textile prices and a weaker Chinese currency, demand remains strong, Sappi said.
“We remain confident that, at current pricing levels and exchange rates, the outlook for this business is positive,” the company said.
By Liezel Hill for www.moneyweb.co.za
New Zealanders’ growing reliance on smartphones is changing the way retailers do business, The Warehouse Group’s chief executive says.
Xerox has announced that it will cut 3 000 jobs company-wide. This comes after bad numbers in the second quarter.
The cuts are part of “a restructuring effort on the services side of the business”.