Reuters | Sep 18, 2019 00:24
By Lisa Baertlein and Sanjana Shivdas
(Reuters) - FedEx Corp (N:FDX) warned on Tuesday that full-year earnings would miss analysts' estimates, as the U.S.-China trade war exacerbates a global economic cooling and the company manages fallout from its split with customer-turned-competitor Amazon.com Inc (O:AMZN).
Shares of the package delivery company tumbled almost 10% in extended trading after profit in its latest quarter fell short of Wall Street's goal.
Executives called out economic woes in Asia and Europe as well as the loss of Amazon, a "large customer."
"Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty," said Chief Executive Frederick Smith, who for the first time on a company conference call, acknowledged that Amazon had emerged as a shipping rival.
"We basically compete in an ecosphere that's got five entities in it. There's UPS. There's DHL. There's the U.S. Postal Service. And now increasingly, there's Amazon," Smith said.
The comments from Memphis, Tennessee-based FedEx came as global retailers are gearing up for the all-important holiday shopping season.
"This is very disappointing for all shareholders," said Trip Miller, managing director at Memphis-based hedge fund Gullane Capital Partners.
While FedEx has been grappling with its own challenges - particularly the costly and lengthy integration of its European TNT business - it is broadly seen as a bellwether for the global economy and the broader logistics sector. Shares of rival United Parcel Service Inc (N:UPS) fell 2.4% after the report.
FedEx now expects adjusted earnings of $11 to $13 per share for full-year 2020 ending May 31. Analysts on average had expected a profit of $14.69 per share, according to Refinitiv IBES estimates.
Adjusted net income fell more than 14% to $800 million, or $3.05 per share, in the fiscal first quarter ended Aug. 31. Revenue was flat at $17.05 billion.
Analysts on average had expected earnings of $3.15 per share.
While global trade is down, "I think a lot of it is a FedEx problem," Cathy Morrow Roberson, founder of consulting firm Logistics Trends & Insights, said of the disappointing results.
FedEx is responding with a new round of cost cuts - including reducing services in its global FedEx Express air network after the holiday season. The shipping also will retire and ground dozens of planes, executives said.
"We think their legacy Express Air segment is a bit pudgy right now," said Miller, who added he would like to see FedEx redeploy resources to bolster delivery for the growing e-commerce segment.
Shares of Fedex fell $16.46 to $156.84 in extended trading.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
More markets insights, more alerts, more ways to customize assets watchlists only on the App
More content, faster quotes and charts, and a smoother experience is available only on the App.