FedEx warns 2020 results to be hurt by trade war, shares fall 2%
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FILE PHOTO: A Federal Express truck on delivery is pictured in downtown Los Angeles, California October 29, 2014. REUTERS/Mike Blake
(Reuters) – Package delivery company FedEx Corp beat Wall Street estimates for quarterly profit on Tuesday, but warned its fiscal 2020 performance would be hurt by trade uncertainty and non-renewal of Amazon contract, sending its shares down 2%.
The company, which gets about a third of its revenue from outside the United States, is in the crosshairs of the Chinese government after two parcels sent via FedEx destined for Huawei addresses in Asia were diverted to the United States. FedEx said the packages were “misrouted in error.”
“Our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express,” Chief Financial Officer Alan Graf said in a statement.
Earlier this month, FedEx decided not to renew its contract with Amazon for U.S. cargo delivery through FedEx Express, the unit that delivers packages on planes.
FedEx said Amazon represented less than 1.3% of its total revenue in the last calendar year.
Adjusted net income fell to $1.32 billion, or $5.01 per share, for the fourth-quarter ended May 31, from $1.60 billion, or $5.91 per share, a year earlier.
Revenue rose to $17.8 billion from $17.3 billion a year earlier.
Analysts on average had expected earnings of $4.85 per share and revenue of $17.79 billion, according to IBES data from Refinitiv.
Reporting by Sanjana Shivdas in Bengaluru; Editing by Arun Koyyur