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FedEx profits slip after booting major customer Amazon

Losing Amazon as a customer is weighing on FedEx's bottom line.The delivery company on Tuesday...

Posted: Sep 18, 2019 9:32 AM

Losing Amazon as a customer is weighing on FedEx's bottom line.

The delivery company on Tuesday posted a slight revenue decline and a 12% drop in operating income for the three months ending August 31, compared to the same period last year. Contributing to that decline, the company said, were global trade disputes, increased costs related to the expansion of its delivery services and the "loss of business from a large customer," a likely reference to Amazon.

FedEx's stock fell nearly 10% in after-hours trading.

Amazon used FedEx previously to deliver online orders to consumers. But Amazon has in recent years become a serious competitor to FedEx as it builds out its own distribution network. In June, FedEx said it would not renew its contract with Amazon for air cargo services, saying it would focus instead on other e-commerce companies such as Walmart and Target.

Then in August, FedEx said it would also stop providing ground delivery services to Amazon. FedEx has noted that Amazon made up only around 1.3% of its revenue in 2018, but losing the business of the e-commerce leader was a sign of growing competition in the logistics business.

In its Tuesday statement, FedEx lowered the forecast for its full-year 2020 earnings, citing the loss of that "large customer," as well as global trade tensions and a weakening global economic outlook. The company now expects earnings per share of $10 to $12. In 2019, FedEx posted full year earnings per share of $2.03, a particularly low number owing to its acquisition of European express delivery company TNT Express. The prior year, earnings were $16.79 per share.

"FedEx is implementing additional cost-reduction initiatives to mitigate the effects of macroeconomic uncertainty," FedEx Chief Financial Officer Alan Graf, Jr. said in a statement, adding that the company will make some reductions to its Express air network to cut costs.

The company is also hiking shipping rates again — starting on January 6, 2020. The cost to ship with FedEx Express, FedEx Ground and FedEx Home Delivery will increase by an average of 4.9%, and FedEx Freight shipping rates will increase an average of 5.9%.

Minnesota Coronavirus Cases

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Cases: 289303

Reported Deaths: 3434
CountyCasesDeaths
Hennepin616511100
Ramsey25903487
Anoka20522218
Dakota20096183
Washington13066109
Stearns1291098
St. Louis7935101
Scott782754
Wright702436
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Clay463856
Carver432213
Blue Earth387112
Rice386033
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Crow Wing334631
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Benton278642
Winona258128
Mower241323
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Polk234423
Morrison219524
Lyon201911
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Beltrami194615
Becker187512
Goodhue185727
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Isanti174316
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Cass12849
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Traverse1360
Lake of the Woods931
Cook600

Iowa Coronavirus Cases

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Cases: 220032

Reported Deaths: 2282
CountyCasesDeaths
Polk32695327
Linn13801164
Scott1068881
Black Hawk10631132
Woodbury10061120
Johnson932336
Dubuque904191
Story666620
Dallas619957
Pottawattamie602967
Sioux362025
Webster348432
Marshall342044
Cerro Gordo340644
Clinton315939
Buena Vista297914
Des Moines278218
Muscatine278268
Warren270510
Plymouth265639
Wapello248671
Jones226913
Jasper210942
Marion200019
Lee195416
Carroll194621
Bremer188712
Henry17917
Crawford172015
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Jackson140712
Delaware139621
Washington136914
Boone132911
Dickinson132710
Mahaska124127
Wright11986
Buchanan114110
Clay11184
Hardin111310
Page11074
Clayton10665
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Harrison104328
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Calhoun10387
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Floyd100914
Mills10097
Kossuth10076
Lyon9988
Poweshiek97113
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Ringgold1982
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