FedEx on Thursday withdrew its full-year guidance and announced significant cost-cutting measures following what it called a softening in global shipping volumes.
“Global volumes declined as macroeconomic trends deteriorated significantly towards the end of the quarter, both internationally and in the US,” Chief Executive Officer Raj Subramaniam said in the statement. “While this performance has been disappointing, we are actively accelerating cost reduction efforts.”
As part of these cost-cutting initiatives, FedEx will close 90 office locations, close five corporate office facilities, postpone hiring efforts, reduce flights, and cancel projects. judgment.
FedEx shares fell about 8% in extended trading Thursday.
The updates came with fiscal first-quarter earnings that were much lower than Wall Street expectations. The company had planned to release the results and hold a conference call with executives next week, but issued the report early.
Here’s how FedEx performed for the period ending August 31, based on Refinitiv consensus estimates:
- Earnings per share: $3.44, adjusted versus $5.14 expected
- Revenue: $23.2 billion vs. $23.59 billion expected
The performance prompted FedEx to withdraw its full-year forecast that had been issued in June, citing a volatile environment that ruled out predictions. The company reduced its capital expenditure forecast for the year by $500 million to $6.3 billion.
The company cited specific weakness in Asia as well as challenges to services in Europe due to underperformance in the first quarter. While these factors have reduced shipping volumes, the company says operating costs remain high. FedEx reported adjusted operating income of $1.23 billion.
For its fiscal second quarter, the company expects adjusted earnings per share of at least $2.75 on revenue between $23.5 billion and $24 billion. Wall Street analysts are looking for Q2 EPS of $5.48 and revenue of $24.86 billion, according to Refinitiv.
