Logistics giant FedEx Corp. (NYSE: FDX) Tuesday said its third-quarter earnings declined from last year amid continuing weakness in the core business. Revenues increased and topped expectations, driving the stock higher during the extended trading hours. The company also suspended its full-year guidance in view of the disruptions caused by the coronavirus crisis.
Earnings, adjusted for one-off items, dropped to $1.41 per share from $3.03 per share in the third quarter of 2019 and missed the estimates. Net income was $315 million or $1.20 per share, down from last year’s profit of $739 million or $2.80 per share.
Revenues up 3%
Meanwhile, revenues increased 3% year-over-year during the quarter to $17.5 billion, which also came in above the consensus forecast.
The company attributed the unimpressive operating results to weakness in global economic conditions – which got aggravated by the coronavirus epidemic – unfavorable pricing environment and rising costs. The top-line has been under pressure from the loss of business from a major customer and a continuing mix shift to lower-yielding services.
“We continue to deliver for our customers and are ready to support increased demand for our International Express export services due to the significant reductions in intercontinental air capacity. While the global economic impact from recent social-distancing mandates is uncertain, we remain well positioned to assist our customers,” said Frederick Smith, chief executive officer of FedEx.
While suspending the full-year 2020 guidance, in response to the covid-19 outbreak that battered markets across the world, the management announced a cost-cutting plan with focus on managing capacity, retiring old aircraft and expediting integration of the TNT Express business.
Looking ahead, the company expects to incur significant costs next year and beyond from the ongoing integration of TNT Express, which had a negative impact on the bottom-line performance in the third quarter.
FedEx’s shares made modest gains this week, after falling to a seven-year low even as the epidemic triggered a mass selloff. The stock, which lost 40% since the beginning of the year, moved up Tuesday evening following the announcement.
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