FedEx offers cautious 2020 outlook amid trade war uncertainty
New York (AFP)
FedEx warned Tuesday that its fiscal 2020 earnings outlook remains clouded by trade war uncertainty and reported a quarterly loss due in part to one-time reorganization costs.
The global shipping company expects higher operating income in fiscal 2020 from its domestic package and freight shipping services as growing e-commerce activity fuels higher revenues.
But operating income is expected to be dented at FedEx Express, its international shipping division, in part because of macroeconomic weakness and trade uncertainty.
"Our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express," said Chief Financial Officer Alan Graf.
"While we are adjusting our costs to mitigate revenue weakness and market shifts, we will continue to invest in areas that expand our capabilities, improve our long-term efficiencies and reduce our cost to serve."
The company reported a net loss of $2 billion for the quarter ending May 31, compared with $1.1 billion in profits in the year-ago period.
FedEx cited lower international revenues and costs associated with a voluntary employee buyouts as factors in the loss.
Revenues rose three percent to $17.8 billion.
The forecast comes a day after FedEx sued the US Commerce Department over export restrictions that it said impose an "impossible burden" on delivery firms and asked a US District Court to block enforcement of the measures.
FedEx has been criticized in China on two occasions in recent weeks over not making deliveries involving Chinese telecommunications giant Huawei following a US crackdown on the company that President Donald Trump has linked to the ongoing US-China trade war.
Shares rose 1.2 percent to $157.85 in after-hours trading.
? 2019 AFP