FedEx traded lower Tuesday after cutting its full year guidance because of weaker global trade flows and a shift by customers toward cheaper shipping options. Management cut its full year earnings forecast to a range of $6.20-6.60 per share, down from the $6.90-7.40 it estimated in June. Consensus currently sits at $7.03.
CEO Fred Smith said, “Exports and trade have gone down at a faster rate than global trade has,” noting that new tech product launches won’t be enough to offset broader weakness in manufacturing.
CFO Alan Graf said the company saw “a shift by our customers to our (non-premium) services and outpaced our ability to reduce FedEx Express operating costs to match demand levels.”
The reduced guidance comes two weeks after the company cut its earnings estimates for the first quarter, with management calling for earnings to be $1.37-1.43 per share. First quarter earnings of $1.45 managed to top that number, while revenue grew to 2.6% to $10.79 billion, ahead of the consensus estimate of $10.7 billion.
FedEx (FDX : NYSE : US$86.46), Net Change: -2.82, % Change: -3.16%, Volume: 5,597,922