FedEx posted surprisingly strong revenue in its latest fiscal quarter, but the delivery giant suspended its financial forecasts for the year because of the uncertain impact of the new coronavirus.
FedEx said Tuesday that it earned $315 million in the quarter that ended Feb. 29 — before the outbreak was labeled a pandemic. That is a 57% drop from a year earlier.
Adjusted to exclude certain costs, FedEx said it earned $1.41 per share, matching the average forecast of 22 analysts surveyed by FactSet.
Revenue rose to $17.5 billion from $17 billion, topping the $16.9 billion that the analysts were expecting.
The company suspended fiscal 2020 earnings and said it is limiting costs by managing capacity, retiring older planes and making changes in its residential deliveries.
“We continue to deliver for our customers and are ready to support increased demand for our International Express export services due to the significant reductions in intercontinental air capacity,” Chairman and CEO Fred Smith said in a statement.
The Memphis, Tennessee-based company said the fiscal third quarter, which included Christmas, was affected by a weaker global economy including impact from the coronavirus outbreak. FedEx also is facing higher costs by expanding FedEx Ground deliveries to seven days a week, a shift by customers to cheaper services, and last year’s cutoff of business with Amazon.
FedEx declined to renew contracts with Amazon for air and ground deliveries. Just before Christmas, Amazon temporarily banned third-party sellers from using FedEx’s ground service to ship to Prime members, saying it was worried that the deliveries might be late.
Shares of FedEx closed up 4.9%, to $94.96, before the financial results were released. After about an hour of extended trading, the shares had gained another 2% to $97.
The shares have dropped 37% this year, while the Standard & Poor’s 500 index has fallen 22%.