The world's biggest package delivery group issued its second profit warning of the year amid slowing global trade and increasing pressures from rival shipping companies
FedEx said non-GAAP earnings for the three months ending in November, the group's fiscal second quarter, fell 37.7% from last year to $2.51 per share, well shy of the Street consensus forecast of $2.76. Group revenues, FedEx said, slipped 2.8% to $17.3 billion but came in just ahead of analysts' forecasts.
"The quarter just ended is an anomaly because of the compressed shipping season before Christmas, necessitating a significant bow wave of expenses and volumes that will largely fall in our third fiscal quarter," CEO Fred Smith told investors on a conference call late Tuesday. "In addition, this quarter has seen significant effects on the industrial economy due to continuing trade disputes, including reductions in international air freight and tepid at best B2B domestic parcel and freight shipping."
"As I listened to the call Tuesday night I found myself thinking that Fred Smith is running a 500,000-person start-up that delivers goods on Saturday and Sunday with ever-rising costs and no increase in the price it can charge and that just lost its best client. No, worse; it just lost its best client and that client is now competing with it!" Jim Cramer wrote in his Real Money column Wednesday morning.
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