Investing.com - FedEx on Tuesday pulled its full-year guidance after reporting mixed third-quarter results as earnings fell short, but revenue topped analysts' estimates.
FedEx (NYSE:FDX) shares gained 2.4% in after-hours trade.
The earnings beat arrived even as margins slipped to 2.8% from 5.8% driven by numerous headwinds, including weaker global economic conditions amid the novel coronavirus and increased costs from expanded service offerings,
"Operating results declined due to weaker global economic conditions including the impact of the coronavirus, higher self-insurance accruals, an unfavorable variable incentive compensation comparison, increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer, a continuing mix shift to lower-yielding services and a more competitive pricing environment," FedEx said.
Looking ahead, the company pulled its full-year earnings guidance due to uncertainty caused by the Covid-19 outbreak and said it would cut costs to offset near-term headwinds.
“We are suspending our fiscal 2020 earnings forecast for our consolidated and segment results due to the uncertainty caused by the coronavirus pandemic,” said CFO Alan B. Graf, Jr. “To mitigate these near-term headwinds and position the company for future earnings growth, we are attacking costs throughout the company by managing capacity, retiring our oldest and least-efficient aircraft, integrating TNT Express, and lowering our residential delivery costs by having FedEx Ground deliver FedEx SmartPost and certain day-definite FedEx Express packages.”
FedEx shares are down 37.2% from the beginning of the year, still down 52.36% from its 52 week high of $199.32 set on April 18, 2019. They are under-performing the S&P 500 which is down 21.88% year to date.
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