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Parcel delivery company FedEx on Tuesday slashed its full-year outlook, sending shares lower as it warned of “ongoing deceleration in global trade” and European weakness.

The Tennessee-based company considered an economic bellwether said it now expects full-year adjusted earnings of between $15.50 to $16.60 a share, lower than its previous outlook of between $17.20 to $17.80 a share.

“Global trade has slowed in recent months and leading indicators point to ongoing deceleration in global trade near-term,” said Alan Graf Jr., chief financial officer. “These trends, coupled with the change in service mix at FedEx Express, are negatively impacting the segment’s financial results.”

FedEx shares fell more than 5 per cent to $176.55 in after-hours trade.

The lower forecast accompanied a reported 9.2 per cent year-on-year rise in quarterly revenues to $17.8bn in the three months ended in November. That was just ahead of analysts’ expectations for $17.75bn, according to a Refinitiv survey.

Net income rose to $935m compared with $775m in the year-ago quarter. Meanwhile, earnings per share rose to $3.51 from $2.84. Adjusting for one-time items, earnings of $4.03 topped forecasts for $3.94.

“While the US economy remains solid, our international business weakened during the quarter, especially in Europe,” said chief executive Frederick W. Smith. “We are taking action to mitigate the impact of this trend through new cost-reduction initiatives.”

FedEx said it is offering buyouts to eligible employees, as well as limiting hiring, cutting discretionary spending and reducing international capacity at FedEx Express.

The abrupt departure of David Cunningham, head of FedEx Express, earlier this month prompted some analysts to speculate that it signalled trouble at the division. On Tuesday, the company said revenue in its Express segment rose 5.8 per cent to $9.6bn in the fiscal second quarter, while operating income rose to $620m, up from $601m in the prior-year quarter.

The company said “lower-than-expected express package volume due to European economic weakness that accelerated during the quarter” is delaying the benefits of its 2016 acquisition of TNT Express.

FedEx shares are down more than 26 per cent year-to-date.

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