(By Balachander) FedEx Corp. (NYSE:FDX) retreated 2.55 percent in premarket trading on Tuesday after the world's largest parcel-delivery company reduced its 2013 earnings forecast and guided second-quarter below consensus amid weak global economic conditions.
The economic bellwether posted lower earnings for the first quarter, citing constrained revenue growth at its FedEx Express segment.
Earnings per share (EPS) fell 0.7 percent to $1.45, yet topped market expectations of $1.40 a share. Net earnings declined 1 percent to $459 million.
Early this month, FedEx reduced its first-quarter EPS forecast $1.37 to $1.43.
Revenue rose 3 percent to $10.79 billion, versus consensus estimate of a growth of 1.70 percent for the three months ended August.
Operating margin shrank to 6.9 percent from 7.0 percent from last year.
At FedEx Express segment, operating income dropped 28 percent due to fall in U.S. domestic package volumes, the demand shift toward lower-yielding international services and higher depreciation and employee benefits expenses.
"Meanwhile, our FedEx Ground and FedEx Freight segments performed well, with both improving their year-over-year operating margins," Frederick Smith, FedEx chief executive officer said.
Looking ahead for the second quarter, FedEx projects earnings to be $1.30 to $1.45 per share, while analysts expect $1.67 per share.
For the full year 2013, the company now expects EPS in the range of $6.20 to $6.60, down from $6.90 to $7.40 projected earlier, while analysts expects $7.04.
Shares of the Memphis, Tennessee-based company, which have been trading in the 52-week range between $64.07 and $97.19, ended Monday's regular trading at $89.28.