By Lisa Baertlein and Ankit Ajmera
(Reuters) – U.S. package delivery company FedEx Corp (N:) suspended its 2020 profit outlook on Tuesday, citing the “significant impact” of coronavirus, and said it would cut costs due to the uncertainty wrought by the pandemic.
The company’s quarterly revenue, however, beat market expectations as more businesses turned to its international express plane service to safeguard their supply chains as COVID-19 illnesses and deaths rise around the world.
Shares in FedEx surged 5% in extended trade before turning down 2.1% at $93.
“The reaction to their release is a bit like driving looking through the rear-view window,” said Trip Miller, managing partner at Memphis-based Gullane Capital Partners.
“There wasn’t much in there for me to feel positive about FedEx or anybody else in the next 60 days,” Miller said.
FedEx, which is seen as an industry bellwether, is the latest large logistics firm to yank its earnings forecast in the face of unprecedented business disruption.
Denmark’s DSV Panalpina (CO:), a transportation and logistics provider, “did the same yesterday,” said Cathy Morrow Roberson, founder of consulting firm Logistics Trends & Insights.
“The market is changing on a daily basis – you can’t forecast that,” she said.
FedEx, which is still grappling to with the integration of its TNT Express unit and higher costs related to launching Sunday home delivery, said the global health crisis presents opportunities.
“While the global economic impact from recent social-distancing mandates is uncertain, we remain well positioned to assist our customers as they work to manage their supply chains and inventories,” Chief Executive Officer Frederick Smith said in a statement.
The package delivery company’s adjusted net income fell to $371 million, or $1.41 per share, in the quarter ended Feb. 29, from $797 million, or $3.03 per share, a year earlier.
Revenue rose about 3% to $17.5 billion.
Analysts on average expected FedEx to earn $1.41 per share and revenue of $16.89 billion, according to Refinitiv IBES data.
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