FedEx Corp. lowered its full-year guidance for a third consecutive quarter as mounting economic uncertainty adds to sputtering demand already squeezing the parcel company’s bottom line.
Adjusted earnings are now expected to be in the range of US$18 to $18.60 per share this fiscal year, below the $18.95 average analyst estimate. FedEx also cautioned that revenue may be slightly down versus the prior year, compared to its previous expectation that sales would be roughly flat.
FedEx is the latest US company to sound the alarm over weakening consumer confidence and potential fallout from President Donald Trump’s escalating trade war. The parcel company is considered an economic bellwether because of its exposure to a broad swath of the global economy, from retail to manufacturing. The company said its latest outlook assumes the global economic, political and trade environment doesn’t worsen any further.
FedEx’s shares fell more than 4 per cent in after-hours trading in New York. The stock had declined 12 per cent this year through Thursday’s close.
The gloomier outlook shows how FedEx continues to wrestle with sputtering package demand amid mounting signs of fresh economic turmoil. Weakness from industrial customers is weighing on its services that cater to businesses, Chief Financial Officer John Dietrich said in a statement Thursday announcing results.
Fiscal third-quarter profit of $4.51 also fell short of the $4.57 estimated by Wall Street. Chief Executive Officer Raj Subramaniam said the company faced a “very challenging” operating environment in the period that included a shorter peak shipping season and severe weather.
Subramaniam is working to transform the company by combining its Express unit that ships parcels by air with its Ground delivery network. The broader industry has been suffering from a prolonged period of weakness as cash-strapped customers spend on services rather than goods, and a growing preference for slower, cheaper delivery options instead of more profitable express shipping.
Cailley LaPara, Bloomberg News
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