LONDON (ShareCast) - (Sharecast News) - International courier services and air freight giant FedEx reported a sharp drop in both sales and profits for its third quarter, blaming its weaker-than-expected performance on its international arm.
For the three months ending on 28 February, and on a non-GAAP basis, the company said that its topline had shrunk by 3% to roughly $17.0bn with net income down by 22% to $797m.

Adjusted operating profits on an EBIT basis meanwhile printed at $984m, which was 7% less than analysts had forecast.

Although the firm said trading had improved in recent weeks, some analysts on the Street were sceptical that the market would give those comments much credence.

As well, some analysts indicated that the biggest negative surprise for them had been the weakness in the company's Ground operations, where EBIT margins dropped by 170 basis points as a result of increased costs for purchased transportation and the launch of six day per week operations.

To take note of, FedEx Ground had been the star performer of the firm in recent years, but this time around quarterly EBIT at the unit fell to $577m.

At FedEx Express meanwhile, third quarter sales printed at $9.0bn, which was also well below the Street's estimates.

Total operating cash flow on the other hand printed at $1.1bn, which was well ahead of analysts' estimates.

Looking ahead, and even assuming "moderate" US economic growth and no additional easing in growth overseas, FedEx management lowered the midpoint of its guidance range for adjusted earnings per share by 3% to $15.10-15.90.

As of 1404 GMT, shares of FedEx were tumbling 5.6% to $171.25.

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