FedEx Profit Pressured by Express Unit's Woes

By Charlie McGee 

FedEx Corp.'s profit was squeezed in its most recent quarter due to lower revenue at its Express air network and higher costs at its Ground business, as the delivery giant navigates turbulence in global trade.

The shipping company reported its operating income declined 0.8% in the quarter ended May 31 to $1.32 billion. The company said expenses increased as it rolled out six-day ground delivery and offered a voluntary employee buyout program for U.S. workers. FedEx said those expenses were partially offset by increased U.S. shipment volumes.

FedEx has been restructuring its operations to adjust to the rise of ecommerce orders and combat slowing international shipping. It recently ended a key contract with Amazon.com Inc. and has been caught up in the U.S.-China trade dispute.

"Fiscal 2019 was a year of both challenge and change for FedEx," FedEx CEO Frederick Smith said.

FedEx had cut its earnings outlook in each of the two previous quarters. On Tuesday, the company said macroeconomic weakness and trade uncertainty, along with a shift by customers to cheaper and slower options, would continue to hurt its bottom line.

The company reported a fourth quarter loss of $1.97 billion, or $7.56 a share, including a large accounting charge for its retirement plan, compared with net income of $1.13 billion, or $4.15 a share, in the year-ago period. Excluding the retirement-plan accounting and business integration costs, earnings were $5.01 a share.

Revenue increased about 3% to $17.8 billion.

Analysts polled by FactSet expected earnings of $4.85 a share on revenue of $17.8 billion.

(END) Dow Jones Newswires

June 25, 2019 17:27 ET (21:27 GMT)

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