By Claudia Assis, MarketWatch
Shares of FedEx Corp. tanked after the logistics company missed profit expectations for its fiscal first quarter and lowered its outlook for fiscal 2020 thanks to “increasing trade tensions” and weaker global economic conditions.
FedEx /zigman2/quotes/203047719/composite FDX -1.72% said late Tuesday it earned $745 million, or $2.84 a share, in the quarter, compared with $835 million, or $3.10 a share, in the year-ago period.
Adjusted for one-time items, the company earned $800 million, or $3.05 a share, compared with $933 million, or $3.46 a share, a year ago. Revenue was flat at $17.05 billion.
Analysts polled by FactSet had expected adjusted earnings of $3.15 a share on sales of $17 billion.
“Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty,” Chief Executive Frederick W. Smith said in a statement.
The stock sank as much as 9.9% in Tuesday’s after-hours session, and extended declines to 11% in premarket trading on Wednesday.
The company pinned its lower operating results mostly on “weakening global economic conditions, increased costs to expand service offerings and continued mix shift to lower-yielding services.” The loss of business from “a large customer” also dragged the results, it said.
These were offset by lower compensation expenses, revenue growth at FedEx Ground and increased yields at FedEx Freight, the company said.
FedEx in August ended its contract to deliver Amazon.com Inc.’s /zigman2/quotes/210331248/composite AMZN -3.07% ground packages, and in June ended its FedEx Express domestic contract with e-commerce giant.
FedEx will take more cost-cutting measures, such as reductions to its FedEx Express air network “to better match capacity with demand,” the company said.
The company forecasts fiscal 2020 adjusted earnings between $11 a share and $13 a share. That takes into consideration “moderate” growth for the U.S. economy, fuel price expectations, and “no further weakening in international economic conditions,” FedEx said.
The analysts surveyed by FactSet expect fiscal 2020 adjusted earnings of $14.68 a share.
Shares of FedEx have gained 7.4% this year, compared with gains of 20% for the S&P 500 index /zigman2/quotes/210599714/realtime SPX -1.04% .