FedEx profits jump but it sees global trade slowdown

posted on 21st December 2018 by Justin Burns
FedEx profits jump but it sees global trade slowdown

FedEx profit jumped almost 21 per cent to $935 million for the second quarter ending 30 November and revenue rose to $17.8 billion from $16.3 billion.

The express freight firm said it has concerns though over trade. “Global trade has slowed in recent months and leading indicators point to ongoing deceleration,” said FedEx chief financial officer, Alan Graf.

He added: “These trends, coupled with the change in service mix at FedEx Express, are negatively impacting the segment’s financial results. We remain committed to actively managing costs with a heightened focus on increasing efficiency across the organization.”

FedEx noted the sharp UK slowdown due to Brexit uncertainty, Germany’s recent gross domestic product contraction, protests in France that threaten to spread to nearby countries and a cooling down in Asia.

“FedEx is in the midst of another record-setting holiday season, and we salute our more than 450,000 team members worldwide for delivering outstanding customer service,” said FedEx chairman and chief executive officer, Frederick W. Smith.

“While the U.S. economy remains solid, our international business weakened during the quarter, especially in Europe. We are taking action to mitigate the impact of this trend through new cost-reduction initiatives.”

FedEx is battling with ongoing margin pressure at its Express and Ground units and reports that Amazon.com will attack its own mounting transportation costs with a competing delivery network.

The express freight company has slashed its 2019 forecast after Europe’s economy weakened and the US trade row increased a slowdown in China and it assumes moderate US domestic economic growth and no further weakening in international economic conditions.