FedEx profit beats amid trade war worries

FedEx profit beats amid trade war worries
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By Lewis Krauskopf

NEW YORK (Reuters) - FedEx Corp reported fourth-quarter profit that beat Wall Street estimates on Tuesday, boosted by higher rates and an increase in sales at its Express business.

Shares of the package delivery company, which suffered their worse sell-off in two months before the results due to the latest U.S.-China trade war worries, rose marginally in after-market trading.

The industrial sector faced the brunt of trade tensions on Tuesday after China vowed to retaliate against U.S. President Donald Trump's threat to impose a 10 percent tariff on $200 billion (£151.8 billion) of Chinese goods.

Shares of both FedEx and rival United Parcel Service Inc closed down about 2 percent on Tuesday.

"They enable the trade between countries, so they are going to be hit more than domestically oriented companies," Jairam Nathan, an analyst with Daiwa Capital Markets America, said of the package delivery stocks.

Amazon Inc's rollout on Tuesday of package delivery lockers for apartment dwellers also may have weighed on FedEx and UPS shares, an analyst said.

In a statement on Tuesday, a UPS spokesman said the company "stands ready to help our customers no matter their needs for crossing borders or addressing trade complexities."

Investors would look for further insight into the fallout from the trade tensions in FedEx's conference call.

In its last quarterly report in March, FedEx Chief Executive Frederick Smith said the company was "concerned about the prospect of increased protectionist tariffs as history has shown repeatedly that protectionism is counterproductive to economic growth."

FedEx on Tuesday said it expects fiscal 2019 revenue to grow about 9 percent, while analysts were expecting about 6 percent growth.

The company expects fiscal 2019 earnings per share of $17.00 to $17.60, excluding some items. Analysts forecast $17.47 a share.

Net income for the reported quarter rose to $1.13 billion, or $4.15 per share, from $1.02 billion, or $3.75 per share, a year earlier.

On a non-GAAP basis, the company earned $5.91 per share. Revenue rose 10.2 percent to $17.3 billion. Analysts expected earnings per share of $5.71 and revenue of $17.3 billion, according to Thomson Reuters I/B/E/S.

Shares of the company rose 0.4 percent to $259.50 in after-market trading.

(Additional reporting by Lisa Baertlein in Los Angeles and Saqib Iqbal Ahmed in New York; Editing by Richard Chang and Arun Koyyur)

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