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FedEx (FDX) reports Q1 earnings

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FedEx on Thursday announced rate hikes and detailed its cost-cutting efforts after the shipping giant warned last week that its fiscal first quarter results were hit by weakening global demand.

Shares of FedEx closed barely higher after the earnings announcement, which was unintentionally released before the bell. “The early earnings release was a tech issue and never intentional,” a spokesperson for the corporate said.

Last week, the corporate’s stock sank after it posted preliminary revenue and earnings that fell wanting Wall Street expectations. CEO Raj Subramaniam cited a troublesome macroeconomic environment, and said he expects the economy to enter a “worldwide recession.” The corporate withdrew its guidance for the yr and said it will slash costs.

An individual walks by a FedEx van in Latest York City, May 9, 2022.

Andrew Kelly | Reuters

The shipping giant struggled with light volumes within the quarter, citing headwinds in its Europe and Asia markets. The poor results shocked the market, as investors tried to differentiate market woes from FedEx’s own internal shortcomings.

In issuing its full first quarter results Thursday, the corporate said that its Express, Ground and Home Delivery rates will increase by a mean of 6.9%. Its FedEx Freight rates will increase by a mean of 6.9%-7.9%, the corporate said.

It also said it believes it is going to save between $1.5 billion and $1.7 billion by parking planes and reducing flights. The closure of certain locations, the suspension of some Sunday operations, and other expense actions will save FedEx Ground between $350 million and $500 million, in line with the corporate.

FedEx said it is going to save a further $350 million to $500 million by reducing vendor use, deferring projects and shutting office locations.

“We’re moving with speed and agility to navigate a difficult operating environment, pulling cost, industrial, and capability levers to regulate to the impacts of reduced demand,” said Subramaniam.

For its fiscal 2023, the corporate expects total cost savings of $2.2 billion to $2.27 billion.

Despite its bleak warning last week, FedEx stood by its 2025 projections set out in June. The corporate is forecasting annual revenue growth of between 4% and 6% and earnings per share growth of between 14% and 19%.

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