The prevailing weak economic sentiments globally have led courier company FedEx Corporation(NYSE:FDX) to cut its earnings forecast on Tuesday.
The slowdown is expected in the company's express division, it said. Slowing economic growth worldwide especially in Europe and Asia have resulted in a shift from overnight air delivery to slower but cheaper forms of package delivery.
FedEx expects to earn between $1.37 and $1.43 per share in the fiscal first quarter that ended Aug. 31. That's down from an original forecast of $1.45 to $1.60 per share. Analysts were expecting $1.56 per share. Shares in the world's second largest courier company fell 3 percent in after-hours trading.
Apart from FedEx, larger rival UPS has also warned about the impact of slower economic growth on their results.
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In July, UPS said customers were worried about what's in store in the second half of the year. The delivery companies have cut or reduced the frequency of flights in Asia, as shipments both within the region and to Europe and the U.S. have slowed.
Revenue grew just 3 percent at FedEx's express division in the quarter ended May 31. Operating income dropped by $148 million due to a charge for the retirement of some aircraft, but a 3 percent decline in package volume also hurt results.
Meanwhile Guidewire Software Inc(NYSE:GWRE)’s shares jumped in opening session Tuesday as the insurance industry software provider said that its fiscal fourth-quarter profit beat market expectations.
Shares were up $2.70, or 9.20 percent, to $32.05 in the opening session.
The company earned $3.5 million, or 6 cents per share, for the quarter that ended July 31. That's compared with a loss of $1.2 million, or 6 cents per share, in the same period last year.
Total revenue increased 33 percent to $67.6 million from $51 million on stronger license, service and maintenance revenue.
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Analysts expected a loss of 2 cents per share on revenue of $62.4 million.
Guidewire earned $15.2 million, or 25 cents per share, for the full fiscal year compared with $35.6 million, or 76 cents per share, in the prior year. Revenue was up 35 percent to $232.1 million.