Fedex cuts profit forecast; shares down
Fedex Corp on Tuesday cut its 2019 profit forecast for the second time in three months, sending its shares down more than 5 per cent and fueling fresh worries it is losing ground to delivery rivals such as United Parcel Service Inc and Deutsche Post DHL Group.
The profit warning and weak quarterly results were another blow to Fedex, which slashed its forecast in December citing a sharp downturn in worldwide trade.
The package delivery industry is widely seen as a bellwether for the global economy.
“Slowinginternationalmacroeconomicconditions and weaker global trade growth trends continue,” Fedex Chief Financial Officer Alan Graf said in a statement on Tuesday.
Executives also blamed the results on the cost of launching year-round, six-days-per-week operations at Fedex Ground in the United States and continued weakness in its international Express business, which includes former Dutch delivery company TNT Express.
Fedex bought that struggling business in 2016 for $4.8 billion and has had difficulties integrating it into its own network.
Fedex expects integration costs to exceed $1.5 billion and said in a regulatory filing that it will complete a project allowing packages to flow between the Fedex Express and TNT Express networks by the end of 2020, more than four years ater acquiring the Dutch delivery company.
Adding to those challenges, a 2017 cyberatack on TNT’S European technology systems cost Fedex some $300 million to fix and sent a number of high-value, time-sensitive customers into the arms of stronger operators in Europe. “It’s cuthroat over there,” said Cathy Morrow Roberson, founder of consulting firm Logistics Trends & Insights. “Fedex Express has some serious problems.”