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FedEx Corp reported worse than expected first quarter 2020 earnings after the close Tuesday. The trade war has hurt $FDX more than most with it's large China presence seeing it lower its guidance for full-year 2020. $FDX was trading down about 9% after hours.

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The trade war has hurt $FDX more than most with it's large China presence. Europe's doldrums haven't helped its TNT Express business either. Rivals include $AMZN, $UPS and DHL

FedEx had been a star of the the bull market - and then came the Trade War.

FedEx Corporation NYSE: FDX Reported Earnings After Close Tuesday

$3.05 Missed $3.17 EPS With $17.05B Missing $17.09billion as expected forecast in revenue

Earnings

FedEx reported it's fiscal Q1 adjusted earnings of $3.05 per share on revenue of $17.05 billion. The market had expected FedEx to post earnings of $3.17 per share on revenue of $17.09 billion for the first quarter. On a GAAP basis, FedEx’s earnings dropped to $745 million or $2.84 per share in the first quarter of 2020 from $835 million or $3.10 per share in the prior year quarter.

Earnings and revenue estimates have been cut on concerns over a slowdown in the global economy, particularly in China and Europe given mounting macro uncertainty, sluggish volume trends and FedEx’s need to refresh its aircraft fleet and make ongoing e-commerce investments.

FedEx has indicated changes in U.S. policy have resulted in several governments, including China, the European Union and India, imposing retaliatory tariffs, and we have seen demand, global trade and economic activity all fall sharply hurting FDX with much lower shipping volumes.

FedEx Corporation NYSE: FDX

Market Reaction After hours $156.07 −$17.23 (-9.94%)

Highlights

  • Yesterday, FedEx announced that shipping rates and surcharges will increase effective January 6, 2020.
  • Shipping rates increased by an average of 4.9% in FedEx Express and FedEx Ground, while FedEx Freight will increase the shipping rate by an average of 5.9%.
  • FedEx stock has increased 8% so far in 2019 and dropped 32% in the past 52 weeks.

FedEx Q1 2020 Earnings

Outlook

FedEx lowered its earnings outlook for fiscal 2020. The company now projects earnings to be $10.00 to $12.00 per share before the year-end MTM retirement plan accounting adjustment, and earnings of $11.00 to $13.00 per share before the year-end MTM retirement plan accounting adjustment and excluding TNT Express integration expenses.

“Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty,” said CEO Frederick Smith.

What to Watch For

  • Key will be 2020 earnings guidance and management comments on the “much anticipated” post-earnings conference call, with questions on Amazon, China and dividends to feature.
  • FedEx’s decision announced on June 7 to end its Express unit’s domestic contract with Amazon.com Inc. AMZN. While this could help improve margins, as it allows the company to add higher-margin business-to-business customers, the need to do so worrys some.
  • FedEx’s declared on June 10 a quarterly dividend that was unchanged from a year ago, which snapped a 10-year streak of rising dividends.

World's largest shipper A.P. Moeller-Maersk A/S Warned on Trade Shrinkage Last Month

Maersk Global East West Imports 2019 Q1

 

Maersk Global Exports 2019 Q1

 

Sources: FedEx, AlphaStreet

From The TradersCommunity Research Desk

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