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Ukraine Cyber Attack To Give More Hits To Corporate Profits

Ukraine Cyber Attack To Give More Hits To Corporate Profits
A costly toll was the result on the results of major U.S. and European companies in the latest quarter by the cyber attack that crippled Ukraine businesses and spread worldwide to shut down shipping ports, factories and corporate offices. And experts say that there is more to come.
The first time that major players across a range of industries have blamed them for significant financial damage to their results has been this financial reporting season even as individual companies have been laid low by hacking attacks in the past.
Causing 5 to 10 days of shipping and production delays after its computer and communications froze, the German consumer products maker Beiersdorf AG blamed the attack for a shortfall in its half-year financial results on Thursday.
And due to report quarterly results later in August are six more major international companies, four based in Europe and two in Russia, which acknowledged they suffered disruption.
Before spreading rapidly through corporate networks of multinationals with operations or suppliers in eastern Europe, the June 27 attack, dubbed NotPetya, first targeted Ukraine, taking down many government agencies and businesses there.
Beiersdorf, the maker of Nivea cosmetics, said it was totting up the costs of the attack for items such as calling in outside experts, promotions and using other production sites to make up for shortfalls while it noted that 35 million euros ($41 million) worth of second-quarter sales were delayed to the third quarter.
"It is very important to stress there is a cost and there will be a cost associated with this," Chief Financial Officer Jesper Andersen said. "We are still working our way through it. Our focus so far has been on recovery."
A material impact on its profit outlook for the full year would be due to the costs, Beiersdorf said.
And having previously reported material financial damage from the cyber "worm" that hit on June 27, in the closing days of the quarter were Cadbury chocolate maker Mondelez and freight logistics company FedEx Corp are among five multinational firms, three from the United States and two in Europe.
Blaming shipping and invoicing delays caused by the June attack, a 5 percent drop in quarterly sales on Wednesday was reported by Mondelez, formerly known as Kraft and the world's second-largest confectionary company.
Ian Winer, equity co-head at Wedbush Securities said that investors should get used to hearing about cyber attacks during earnings calls.
"The trend is accelerating," he said. "As hackers get more sophisticated they are taking shots at major companies."
Development or finding of malware to wipe data on computers, making them inoperable, was being done by more hackers.
Operations worldwide had been significantly affected, but it lost no corporate data to outside parties, said the Danish shipping company AP Moller-Maersk S/A, which handles one out of seven containers shipped globally, on July 20.
It would address the impact on Aug. 16, when it reports second-quarter results, Maersk said while declining to comment.
"We anticipate a limited impact from the cyber attack (estimates range from $50-$450 million) as it started towards the end of (the second quarter)," Jefferies analyst David Kerstens said in a note to clients. The hit to Maersk results in a range of $100-$200 million, analysts, on average, estimate.
While providing no further details, acknowledgement that their Ukrainian operations were infected was made by German mail and logistics firm Deutsche Post DHL Group and retailer Metro AG.

On the other hand, Merck & Co Inc said that it was yet to understand the full costs associated with the NotPetya attack as  the company last week warned the attack had halted production of some drugs.

Christopher J. Mitchell

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