FedEx warns of continuing weakness in global trade

FedEx founder Fred Smith

FedEx reported fiscal third quarter financial results that were “below expectations” and has warned of continued weakness in global trade.

The express firm registered an adjusted third-quarter net profit of $797m compared with $1bn a year earlier, while revenues edged up to $17bn from $16.5bn.

“Our third quarter financial results were below our expectations and we are focused on initiatives to improve our performance,” said Frederick Smith, FedEx Corp chairman and chief executive.

Alan Graf, FedEx Corp executive vice president and chief financial officer, added: “Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue.”

To offset the lower profits and market outlook launched a voluntary employee buyout programme, constrained its hiring, is limiting discretionary spending and is reviewing additional actions to mitigate the lower-than-expected revenue trends.

Despite the decline in net profit and weaker than expected revenue growth, adjusted operating profits for the quarter increased compared with a year ago.

Operating income improved due to lower incentive compensation expenses, US volume growth, a favourable net impact of fuel at all transportation segments and increased yields at FedEx Freight and FedEx Ground.

Looking ahead the company is expecting moderate US domestic economic growth and no further weakening in international economic conditions.

FedEx also continues to integrate the TNT business, purchased in 2016, into its own.

“We are focused on offering innovative e-commerce solutions, increasing our revenue quality, reducing our cost to serve and completing the integration of TNT Express,” said Rajesh Subramaniam, FedEx Corp. president and chief operating officer.

“We remain confident in the long-term strategic value of the FedEx Express/TNT Express combination and look forward to realising the synergies from a single pickup-and-delivery network, single air and road network, back-office efficiencies and sustained revenue growth.”