FedEx Corp. (FDX.N) cut its profit forecast and announced an international capacity reduction as the courier grapples with a slowdown in global trade.
- FedEx slashed its target for adjusted earnings in fiscal 2019 to US$15.50 to US$16.60 a share from a previous goal of US$17.20 to US$17.80. The company also said in a statement that it won’t meet a target for operating-profit growth at the Express unit of US$1.2 billion and US$1.5 billion in fiscal year 2020.
Key Insights
- The company fueled concerns about the economic outlook as Chief Financial Officer Alan Graf said FedEx was taking a hit from “ongoing deceleration in global trade near-term.”
- The guidance cut, coming three months after the company had raised its outlook, shows how the economic environment has changed.
- International capacity reductions at the Express air-freight unit and a voluntary buyout program show FedEx’s planning for an economy with less demand for package deliveries.
- FedEx is also getting hurt in Europe, where “economic weakness that accelerated during the quarter” will delay the benefit of the company’s acquisition of TNT Express.
Market Reaction
- FedEx fell 4.3 per cent to US$177.05 after the close of regular trading in New York. The shares slid 26 per cent this year through Tuesday, compared with an 18 percent drop for United Parcel Service Inc. A Standard & Poor’s index of industrial companies dropped 13 per cent.
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