FedEx Corp. (FDX) - Get Report shares traded sharply lower Wednesday after the world's biggest package delivery group warned that full-year profits would likely disappoint Wall Street as the U.S.-China trade war hives demand and the loss of a major contract with Amazon Inc. (AMZN) - Get Report eats into its bottom line. 

FedEx said adjusted non-GAAP earnings for the three months ending in August, the company's fiscal first quarter, came in at $3.05 per share, down 11.8% from the same period last year and 10 cents shy of the Street consensus forecast. Group revenues, FedEx said, were largely flat from last year at $17.04 billion and matched analysts forecasts.

Looking into its 2020 fiscal year, which ends in May, FedEx said it sees earnings in the region of $11 to $13 per share, well south of the $14.69 estimate collected by Refinitiv and around 12% below its implied guidance of $14.75 per share from June of this year. 

"The market is changing as volumes are moving out of the (US Postal Service) and we are in-sourcing more," CEO Fred Smith told investors on a conference call late Tuesday. "Over the summer, these challenges increased somewhat due to the decision to not renew our largest Amazon contract and deepening trade disputes."

"While the Amazon contracts represented only a small proportion of our revenues, the nature of our business is such that near-term profits will be adversely affected since the last bit of volume has significant flow through to the bottom line," Smith added. "However, we have closed additional business to replace this traffic, which is being on boarded, and we are taking out significant costs which were unique to Amazon's requirements."

FedEx shares were marked 13.5% lower at the start of trading Wednesday to change hands at $149.90 each, a move that leave the stock with a year-to-date decline of 7% and a market value of $39.1 billion.

"The weaker global macroeconomic environment is weighing more heavily on FDX's higher-margin B2B business than anticipated," said BMO Capital Markets analyst Fadi Chamoun, who lowered his rating on the stock to "market perform" with a $165 price target. "A more aggressive pivoting to serve the B2C market in the U.S. is requiring greater upfront investment and also limiting the visibility into the medium-term outlook for Ground margins," he added.

"TNT should prove to be a significant growth catalyst over the medium to long term once integration is complete and costs to serve improve, particularly in Europe, but any meaningful contribution appears to be at least a year away with limited visibility and downside potential if trade tensions escalate and/ or the macro backdrop weakens further."