FedEx Issues Warning About Economy After Reporting Earnings

FedEx reported its third quarter financial results on Tuesday after the market closed and gave Wall Street some bad news to digest.

The logistics shipping company cut its full-year guidance and warned that the world is slowing.
Citing unfavorable exchange rates and the negative consequences of the trade war, the company reported declining international revenue.

For the third quarter, FedEx reported earnings per share of $3.03 vs. $3.11 expected , according to analysts surveyed by Refinitiv. Revenue was $17.01 billion vs. $17.67 billion expected.

For the fourth quarter, the company is expecting fiscal earnings per share between $4.58 and $5.38, compared to the estimated $5.39.

For 2019 the company has guided for earnings between $15.10 and $15.90 compared with a forecast of $15.97, according to analysts surveyed by Refinitiv.

FedEx executive vice president and chief financial officer, Ala B. Graf, Jr., stated, “Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue.”

Graf said that the company’s international business weakened during the second quarter, especially in Europe.

CEO Frederick W. Smith said third-quarter results were “below our expectations” and said the company is focused on ways to improve. He said, “Our investments in innovation, network infrastructure and automation will increase our competitiveness and drive long-term earnings growth. FedEx built and operates the preeminent global parcel and logistics network, and we have a lengthy track record of success.”

Many have been worried about Amazon being a threat to the company but President and Chief Financial Officer Rajesh Subramaniam noted that Amazon accounted for less than 1.3 percent of the company’s total revenue for the 12-month period ended December 31, 2018. “Nor is Amazon a threat to our future growth,” he said.

Disclaimer: We have no FedEx Corporation (NYSE: FDX) and have not been compensated for this article.