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FedEx likely to report weak Q1 earnings on Sept 17

By Staff Correspondent |
earnings preview

FedEx Corporation (NYSE: FDX) is set to report its earnings results for the first quarter of fiscal 2020 on Tuesday, September 17, after the market closes. The bottom line will be hurt by loss from other retirement plans as well as higher costs and expenses, while the top line will be negatively impacted by the continued weakness in the global trade.

The FedEx Express Q1 2020 results will be negatively impacted by macroeconomic weakness and trade uncertainty.
Courtesy: FedEx

At FedEx Express, the results will be negatively impacted by macroeconomic weakness and trade uncertainty, continued mix shift to lower-yielding services, and a strategic decision not to renew a customer contract. The company is likely to experience an increase in operating costs in FedEx Ground due to its continued focus on investments that increase its ability to meet the e-commerce demand.

FedEx will incur an increase in operational efficiency at FedEx Freight as the segment is investing in upgraded dock equipment and vehicle technology. Also, the bottom line will be negatively impacted by the loss of associated with decreased shipments in the TNT Express network, as well as incremental costs to restore information-technology systems.

Analysts expect the company’s earnings to decline by 8.40% to $3.17 per share while revenue will rise by 0.20% to $17.09 billion for the first quarter. In comparison, during the previous year quarter, FedEx posted a profit of $3.46 per share on revenue of $17.05 billion. The company has missed analysts’ expectations twice in the past four quarters.

Read: Duluth Q2 earnings review

For the fourth quarter, FedEx slipped to a loss from a profit last year. The results were negatively impacted by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs primarily associated with the US-based voluntary employee buyout program. Revenue rose by 3%.

For fiscal 2020, the company expects a low-single-digit percentage point increase in EPS prior to the year-end MTM retirement plan accounting adjustment compared with fiscal 2019 earnings of $13.25 per share. FedEx sees a mid-single-digit percentage point decline in EPS prior to the year-end MTM retirement plan accounting adjustment and excluding estimated TNT Express integration expenses compared with last year’s adjusted EPS of $15.52.

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference and much more!

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