MEMPHIS, Tenn. (AP) — Profit at FedEx fell 11% in its fiscal first quarter, as the package delivery company was buffeted by slower economic growth and the loss of business from retail giant Amazon.
The results fell short of Wall Street expectations, and the company lowered its forecast of earnings through next spring.
FedEx Corp. shares dropped sharply in after-hours trading.
The Memphis, Tennessee-based company said it would cut costs, including scaling back capacity in its express air-delivery network after the peak holiday season. That unit is likely particularly affected by trade uncertainty.
FedEx is also raising prices. It announced Monday that it will raise rates on express, ground and home deliveries by an average of 4.9% starting Jan. 6. Freight rates will rise 5.9%.
“Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty,” Chairman and CEO Fred Smith said in a statement.
The company added that it was lowering its profit outlook for the rest of the fiscal year — through next May — partly because of the loss of ground-based shipments from a large customer. FedEx ended a contract with Amazon last month, having previously decided not to renew an air-shipping contract with Amazon.com Inc.
Its quarterly profit of $745 million was done from $835 million a year earlier. Excluding special items including expenses to fold European business TNT into its own, FedEx said it would have earned $3.05 per share. The average estimate of 10 analysts surveyed by Zacks Investment Research was for $3.17 per share.
Revenue was flat at $17.05 billion, also below analysts’ forecasts.
FedEx said it now expects full-year earnings of between $11 and $13 per share, excluding TNT integration costs and an accounting adjustment related to a pension plan. Analysts had been expecting $14.68 a share, according to FactSet.
Before the release of the financial report, FedEx shares closed down 27 cents at $173.30, leaving them 32% lower than a year ago. After about one hour of late trading, they were down another $16.10, or 9.3 percent, to $157.20.