FedEx On Thursday it withdrew its full-year guidance and announced major cost-cutting measures after what it called a softening in the global volume of shipments.
“Global volumes declined as macroeconomic trends deteriorated significantly later in the quarter, both internationally and in the US,” CEO Raj Subramaniam said in the statement. “While this performance is disappointing, we are aggressively accelerating cost-cutting efforts.”
As part of these cost-cutting initiatives, FedEx will close 90 office locations, close five company office facilities, postpone staffing efforts, reduce flights, and cancel projects.
FedEx stock fell about 12% in extended trading Thursday.
Updates come along First Quarter Earnings That came in well below Wall Street expectations. The company was due to announce the results and hold a phone call with executives next week, but it released the report early.
Here’s how FedEx performed in the period ending August 31, based on Refinitiv consensus estimates:
- EPS: $3.44, adjusted for $5.14 expected
- Revenue: $23.2 billion vs. $23.59 billion forecast
The performance led FedEx to withdraw its full-year forecast set in June, citing a volatile environment that prevented forecasting. The company cut its capital expenditure forecast for the year by $500 million to $6.3 billion.
The company cited specific weakness in Asia as well as service challenges in Europe due to its poor performance in the first quarter. While those factors have throttled shipping volumes, the company said operating expenses remained high. FedEx reported adjusted operating income of $1.23 billion.
For the fiscal second quarter, the company expects adjusted earnings per share of at least $2.75 on revenue ranging from $23.5 billion to $24 billion. Wall Street analysts were looking for second-quarter earnings per share of $5.48 and revenue of $24.86 billion, according to Refinitiv.
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