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(Reuters) – Package delivery company FedEx Corp beat Wall Street estimates for quarterly profit on Tuesday, but warned that U.S.-China trade tensions and the non-renewal of its contract with Amazon.com Inc would hurt its fiscal 2020 performance.

FILE PHOTO: A Federal Express truck on delivery is pictured in downtown Los Angeles, California October 29, 2014. REUTERS/Mike Blake

Shares of the company recouped from initial loses and were last up 1.4% at $157.76 in extended trading.

The shipping giant, which gets about a third of its revenue from outside the United States, is in the crosshairs of the Chinese government after two parcels sent via FedEx to Huawei addresses in Asia were diverted to the United States. FedEx said the packages were “misrouted in error.”

“Our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express,” Chief Financial Officer Alan Graf said in a statement.

FedEx forecast a mid-single-digit percentage point decline in adjusted earnings for fiscal 2020.

Earlier this month, FedEx decided not to renew its contract with Amazon for U.S. cargo delivery through FedEx Express, the unit that delivers packages on planes. Amazon represented less than 1.3% of its total revenue in the last calendar year.

“If we see these tariffs rise to say 25% as the Trump administration has talked about…one of the biggest losers in the American economy would be FedEx,” said Matthew White, a transportation and package delivery industry specialist.

“Trade weakness is very hard to predict, as it can be caused by both policy and sentiment. Unfortunately, FedEx is seeing negative effects of both.”

FedEx also said the cost of integrating Dutch delivery company TNT Express to the company was now expected to be about $1.7 billion through fiscal 2021. It bought TNT Express in 2016 for $4.8 billion and has struggled to integrate it into its own network.

Adjusted net income fell to $1.32 billion, or $5.01 per share, for the fourth-quarter ended May 31, from $1.60 billion, or $5.91 per share, a year earlier.

Revenue rose to $17.8 billion from $17.3 billion a year earlier, largely due to growth in U.S. volume and higher revenue per shipment at FedEx Freight and FedEx Ground.

Analysts on average had expected earnings of $4.85 per share and revenue of $17.79 billion, according to IBES data from Refinitiv.

Reporting by Sanjana Shivdas in Bengaluru; Editing by Arun Koyyur

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