FedEx stocks plummeted by 9.8% to $252.58 in extended trading after the courier company missed its quarterly earnings estimates for the three months ended November. While the company’s adjusted earnings rose 23% to $1.01 billion, or $3.99 per diluted share, this figure fell short of analysts’ estimates by 19 cents per share. The company then decided to cut its full-year revenue forecast.
Operating income for the quarter in FedEx’s air-based Express unit slumped by 60% for the quarter, while the operating income of the FedEx Ground division surged by 51%. While the Express division partly fell due to the U.S. Postal Service shifting more packages from air delivery to ground delivery, FedEx is in the process of negotiating a renewal of its post office contract which is expected to improve profitability.
“We expect revenue will continue to be pressured by volatile macroeconomic conditions negatively affecting customer demand for our services across our transportation companies”, FedEx explained in a regulatory filing, thereby justifying its decision to reduce its revenue outlook. The company now expects to experience a single-digit percentage decline in revenue compared to last year.