FedEx Corp. further lowered its profit forecast for fiscal year 2020 as it reported weaker-than-expected earnings for its second quarter, sending shares tumbling in after-hours trading.
The shipping giant now expects its fiscal-year adjusted earnings to be in the range of $10.25 to $11.50 per share, down from the range of $11.00 to $13.00 per share projected in September.
FedEx said its revised earnings forecast is based on expectations of moderate U.S. economic growth and that international trade relations would not worsen. The updated outlook also reflects lower-than-expected revenue in all of its transportation segments and higher-than-expected expenses.
"Fiscal 2020 is a year of continued significant challenges and changes for FedEx, particularly in the quarter just ended, due to the compressed shipping season," FedEx Chairman and CEO Frederick Smith said.
FedEx's non-GAAP EPS for the second quarter ended Nov. 30 was $2.51, down 37.7% year over year from $4.03. The company's fiscal year begins June 1.
Non-GAAP net income totaled $660 million, a decline of 38.9% from $1.08 billion in the year-earlier period.
The S&P Global Market Intelligence consensus normalized EPS estimate for the quarter was $2.78.
On a GAAP basis, fiscal second-quarter net income fell to $560 million, or $2.13 per share, from $935 million, or $3.51 per share, in the prior-year period.
Revenue fell year over year to $17.30 billion from $17.80 billion in the second quarter.
FedEx blamed weak global economic conditions for its disappointing second-quarter results, as well as increased costs at its FedEx Ground segment and the loss of business from a major customer. In August, FedEx ended its ground-delivery contract with Amazon.com Inc.
In response to its revised earnings forecast, FedEx plans to implement reductions to its global FedEx Express air network and further restrict hiring, according to FedEx CFO Alan Graf Jr. The company also intends to pursue investments in technology to boost productivity and lower costs.
FedEx shares were down 6.5% shortly before 4:50 p.m. ET. The stock ended the trading day 0.5% lower.