FedEx cuts 2019 forecast again, stocks fall 5 percent
By Lisa Baertlein and Ankit Ajmera
(Reuters) ̵[ads1]1; In 2019, FedEx Corp empties its forecast for 2019 for the second time in three months, sending the shares down 5 percent and burning fresh worries it loses ground in Europe to supply rivals United Parcel Service Inc and Deutsche Post DHL Group.
The earnings gain and weak quarterly results were a new blow to FedEx, having made the forecast in December when it announced a sharp deal in global trade.
Package The supplier industry is widely regarded as a bellwether for the world economy.
"Slow international macroeconomic conditions and weaker global growth trends continue," FedEx CFO Alan Graf said in a statement Tuesday.
Leaders also blame disappointing results at the expense of launch all year, six days a week operations at FedEx Ground in the United States and continued weakness in their international Express business, which includes former Dutch shipping company TNT Express.
FedEx bought the demanding business in 2016 for $ 4.8 billion, and has had difficulty integrating it into its own network.
FedEx said in a regulatory announcement on Tuesday that it would complete a project that allows packages to flow between the FedEx Express and TNT Express networks by the end of 2020, more than four years after the Dutch delivery company was taken over.
Adding to the integrated challenge, a 2017 cyber attack on TNT's European technology systems costs FedEx some $ 300 million to fix and sent a number of high-value, time-sensitive customers into the arms of stronger European operators.
"It's cutthroat over there," said Cathy Morrow Roberson, founder of the consulting company Logistics Trends & Insights. "FedEx Express has some serious issues."
Germany's Deutsche Post DHL earlier this month said that there are no noticeable signs of a downturn in the horizon, adding that the broad geographical and operational base would make it resistant even if global economic growth weakened. [L5N20U0TC]
UPS in the Atlanta base has less international exposure than FedEx, and said in January that US performance helped buff the impact of global economic softening. [L3N1ZV4LF]
FedEx has shaken the management – included in the Express division – offered voluntary buyouts and limited discretionary expenses to reduce decline.
The result for the quarter that included FedEx's highest vacation vacation and gift yield fell to $ 797 million, or $ 3.03 per diluted share, below analysts' expectations of $ 3.11 per share, according to Refinitiv data.
"It seems that UPS had a better high season," said Morrow Roberson, Logistics Trends & Insights. "It looks like UPS was better in planning and forecasting."
FedEx now expects to earn $ 15.10 to $ 15.90 for the 2019 fiscal year ending May 31. Analysts had predicted full-year financed 2019 earnings per share of $ 15.97.
In the aftermarket, the FedEx shares were down 5 percent at $ 172.24.
(Reporting by Lisa Baertlein in Los Angeles and Ankit Ajmera in Bengaluru; Editing by Nick Carey and Sriraj Kalluvila)
