FedEx Corp. (NYSE: FDX) reported first-quarter fiscal 2016 results before markets opened Wednesday. The package delivery service reported quarterly diluted earnings per share (EPS) of $2.42 on revenues of $12.3 billion. In the same period a year ago, FedEx reported adjusted EPS of $2.12 on revenue of $11.7 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $2.46 and $12.3 billion in revenue.

The company lowered the forecast for its 2016 full-year EPS from a prior range of $10.60 to $11.10 to a new range of $10.40 to $10.90 and affirmed the capital spending budget of $4.6 billion. The consensus estimates call for EPS of $10.82 and revenues of $50.31 billion. The outlook assumes moderate economic growth and does not include any operating results or costs related to TNT Express.

The company’s chief financial officer said:

Our new fiscal 2016 outlook is modestly lower than our initial forecast due primarily to weaker LTL industry demand and higher than expected self-insurance reserves and operating costs at FedEx Ground. We still expect strong earnings growth this year, as we remain focused on executing our profit improvement program, leveraging e-commerce growth and enhancing our revenue quality.

FedEx repurchased 1.1 million shares of stock during the quarter.

The company announced on Tuesday that shipping rates for FedEx Express, FedEx Ground and FedEx Freight will increase by an average of 4.9% effective January 4, 2016. FedEx is also increasing surcharges for FedEx Ground shipments that exceed the published maximum weight or dimensional limits, and updating certain fuel surcharge tables at FedEx Express and FedEx Ground effective November 2, 2015.

Higher freight rates will not appease investors who will have noticed that Chairman and CEO Fred Smith said that FedEx performed “solidly given weaker-than-expected economic conditions, especially in manufacturing and global trade.” That does not translate into good news for the company.

Shares of FedEx traded down about 3% in premarket trading Wednesday, at $149.34 in a 52-week range of $130.13 to $185.19. The consensus price target from Thomson Reuters was $192.88 before the results were announced.

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