- 18 September 2019
- Transport / Logistics Services
FedEx is lowering its 2020 financial year earnings forecast after a decline in net income in Q1.
Net income at FedEx for the quarter ending August 31 fell to $745 million from $835 million in the same period last year. Revenue was almost the same as last year ($17.05bn vs 2019’s $17.052bn). Operating profit showed a fall too ($977 million vs $1.071bn last year).
Frederick W. Smith, FedEx Corp. chairman and chief executive officer commented: “Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty.”
FedEx Ground recorded increased costs, and the company referred to the lost of FedEx Ground losing a ‘large customer’, likely to be Amazon.
“Despite these challenges,” says Smith, “We are positioning FedEx to leverage future growth opportunities as we continue the integration of TNT Express, enhance FedEx Ground residential delivery capabilities and modernise the FedEx Express air fleet and hub operations.”
Global economic conditions played a role in the income drop, as did increased costs in expanding service offerings.
“FedEx is implementing additional cost-reduction initiatives to mitigate the effects of macroeconomic uncertainty, including post-peak reductions to the global FedEx Express air network to better match capacity with demand,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “However, we are continuing to make strategic investments to improve our capabilities and efficiency, which we expect will drive long-term increases in earnings, margins, cash flows and returns.”