FedEx(FDX, $163.25) misses fiscal Q2 earnings; disappoints on 2020 guidance
FedEx missed earnings estimates for its fiscal-second-quarter, and also provided lower-than-expected guidance for the full fiscal year 2020.
In the quarter ended Nov. 30, the courier delivery service company’s earnings came in at $2.13 a share, lower than the year-ago quarter’s $3.51. The figure also missed the $2.60 expected by analysts polled by FactSet.
FedEx’s adjusted earnings of $2.51 also fell below analysts’ estimate of $2.78.
The second-quarter earnings were affected by charges of 19 cents a share each for expense related to integrating TNT Express and for aircraft-asset impairment.
The company cited weak global economic conditions, increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer, a continuing mix shift to lower-yielding services and a more competitive pricing environment as some of the factors behind declining operating results.
This week, Amazon temporarily barred certain third-party sellers from using the FedEx Ground delivery network to handle Prime shipments. Earlier in the year, FedEx announced that it’s terminating its ground delivery contract with Amazon, which is building its own logistics network.
Looking ahead, FedEx now expects fiscal full-year 2020 earnings of $9.10 to $10.35 a share – before the impact of a year-end accounting adjustment for a retirement plan. It was unable to forecast the fiscal 2020 year-end mark-to-market (MTM) retirement plan accounting adjustment. The company said earnings should range between $10.25 and $11.50 a share before that adjustment and excluding TNT Express integration expenses and aircraft impairment charges. Analysts surveyed by FactSet were expecting $12.09.
Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer, indicated that FedEx’s revised guidance reflects lower-than-expected revenue at each of its transportation segments and higher-than-expected expenses driven by continued mix shift to residential delivery services. He further mentioned that the company is implementing reductions to the global FedEx Express air network to effectively match capacity with demand, and also taking steps to lower costs.
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provider of a broad portfolio of transportation, e-commerce and business services under the FedEx brand
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