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(Sharecast News) - FedEx shares were falling sharply on Wednesday after the transport and logistics giant underwhelmed with its guidance for the current quarter as demand was held back by a raft of trade policy changes.
Fourth-quarter results came in better than expected, but the company disappointed with first-quarter projections, whilst choosing not to provide full-year guidance. According to Dow Jones, this was the first time in a decade that the company decided against giving a full-year outlook.
For the three months to 31 May, diluted earnings per share increased 12% to $6.07, as a marginal increase in revenue, up 1% at $22.2bn, was met with a solid improvement in the operating margin to 9.1% from 8.5%.
Consensus forecasts pointed to EPS of $5.82 and revenues of $21.7bn.
However, for the first quarter, FedEx predicted just 0-2% revenue growth over the previous year, and diluted EPS of $2.90-3.50, under analysts' estimates.
In an earnings call, chief executive Raj Subramaniam pointed to a "volatile" global demand environment, blaming US trade tariffs and an end to duty-free status for low-cost DTC shipments from China.
"The fact the company didn't feel able to deliver an outlook for the current financial year feels quite telling, as does its downbeat guidance for the current quarter. This may result in some consternation in the markets beyond just the fortunes of FedEx itself," said Russ Mould, investment director at AJ Bell.
"Tariffs were largely blamed for the difficult outlook, with the company flagging a hit on Chinese exports to the US."
FedEx shares were down nearly 4% at $220.60 in pre-market trading.
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