FedEx Corp. posted weak quarterly results in its core express business and warned on Tuesday that its profit in the year ahead will be destroyed by slowing growth in the world economy and the decision to drop a contract with retail giant Amazon.
The delivery company announced a quarterly loss of nearly $2 billion. After adjusting for a change in pension-plan accounting and other items that the company doesn’t expect will repeat, however, the results were better than Wall Street anticipated.
FedEx started a new financial year this month, and Chief Financial Officer Alan Graf said the company’s performance, especially at FedEx Express, is being damaged by continued weakness in global trade and industrial production.
The company declared this month that it would not replace an airfreight-delivery contract with Amazon that expires on June 30. It did not reveal the value of that work but said Amazon accounted for less than 1.3% of its revenue in 2018.FedEx also finds itself in the middle of a trade dispute between the U.S. and China. On Monday, the company claimed the Commerce Department, trying to stop it from making export rules that restrict shipments to Chinese telecommunications devices maker Huawei Technologies. Huawei was recently added to a list of companies barred from receiving U.S. technology without a special license from the Commerce Department.
In the fiscal fourth quarter, which ended on May 31, FedEx reported a loss of $1.97 billion, compared with a profit of $1.13 billion a year earlier.
Excluding what the company considered special items, FedEx said adjusted profit was $5.01 per share. While down from $5.91 a year earlier, the results beat expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for $4.81 per share.