FedEx Corporation (NYSE: FDX) stock rose over 2.2% on 26th June, 2019 (As of 1:36 pm GMT-4; Source: Google finance) as the company posted better than expected results for the fourth quarter of FY 19. In the fiscal fourth quarter, which ended May 31, FedEx reported a loss of $1.97 billion, compared with profit of $1.13 billion a year earlier. The company has posted weak quarterly results in its core express business and warned that its profit in the year ahead will be hurt by slowing growth in the world economy and the decision to drop a contract with retail giant Amazon.
Earlier this month, FedEx decided not to renew its contract with Amazon, which represented less than 1.3% of its total revenue in the last calendar year, for U.S. cargo delivery through FedEx Express, the unit that delivers packages on planes. FedEx described the decision as a strategic move that would allow it to focus on the broader e-commerce market, a group that would include rivals of Amazon scaling up one- and two-day delivery. FedEx also said the cost of integrating Dutch delivery company TNT Express into the company was now expected to be about $1.7 billion through fiscal 2021. Fedex had said in March the cost would be more than $1.5 billion (£1.2 billion). It bought TNT Express in 2016 for $4.8 billion and has struggled to integrate it into its own network.
Moreover, FedEx also finds itself in the middle of a trade dispute between the U.S. and China. The company has sued the Commerce Department, seeking to stop it from enforcing export rules that restrict shipments to Chinese telecommunications-equipment 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.
FDX in the fourth quarter of FY 19 has reported the adjusted earnings per share of $5.01, beating the analysts’ estimates for the adjusted earnings per share of $4.85, according to IBES data from Refinitiv. The company had reported the adjusted revenue growth of 3 percent to $17.8 billion in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $17.79 billion. The revenue grew due to growth in U.S. volume and higher revenue per shipment at FedEx Freight and FedEx Ground. However, the company’s biggest business, express, saw lower revenue from international priority packages, and the unit’s operating income slid by 12% on a 1% dip in sales
FedEx anticipates a mid-single-digit percentage point decline in adjusted earnings for fiscal 2020.