FedEx Dips After Trimming Guidance For A Second Time


FedEx Corp. (NYSE: FDX)

FedEx on Tuesday announced third-quarter financial results that missed both Wall Street’s and the company’s estimates. Further, the delivery giant trimmed its 2019 earnings guidance for a second time, citing weak global trade growth. The news dragged down shares of the Memphis, Tennessee-based company in after-hours trading.

FedEx cut its earnings outlook in December, blaming economic uncertainty in its Asian and European markets. As of 4:44 p.m. EDT, the stock was down $9.46, or 5.21% to $171.95. The stock has rallied 12.5% since the beginning of the year through Tuesday’s close.

FDX Earnings & Outlook

FedEx posted third-quarter earnings of $739 million, or $2.80 per share, down from $2.07 billion, or $7.59 per share, in the same period a year earlier. Excluding non-recurring items, the package delivery company earned $797 million, or $3.03 per share during the three months to February 28, 2019.

On average, analysts surveyed by Refinitiv expected adjusted earnings of $3.11 per share. In the same period a year ago, FedEx reported diluted earnings of $1.02 billion, or $3.72 per share. Group revenues, FedEx said, were pegged at $17 billion, compared with Refinitiv estimate of $17.6 billion. The company had revenues of $16.5 billion in the prior-year period.

The company said that revenue in its FedEx Express international business fell because of unfavorable exchange rates and lower yields. In addition, higher costs at the FedEx Ground segment were driven in part by increased purchased transportation rates, and the January launch of year-round, six-day-per-week operations.

Looking ahead, FedEx views 2019 earnings of between $15.10 to $15.90 per share. The company had set its previous outlook at between $15.50 to $16.60 per share. Analysts expect it to come out with earnings of $15.90 per share for the year.

FedEx Executive Comments

“Our third quarter financial results were below our expectations and we are focused on initiatives to improve our performance,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “Our investments in innovation, network infrastructure and automation will increase our competitiveness and drive long-term earnings growth.”

“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,” said Alan Graf, Jr., the company’s executive vice president and CFO.

FedEx Corp. Profile

FedEx pioneered overnight delivery in 1973 and remains the world’s largest express delivery firm. In fiscal 2018, FedEx derived about 55% of its $65 billion top line from its Express division, 28% of sales from Ground, and 10% from its Freight less-than-truckload trucking segment.

FedEx Office provides document production and shipping services, and Trade Networks offers freight forwarding. FedEx acquired the large Dutch parcel delivery firm, TNT Express, in 2016.