A FedEx skid lands at Shanghai Pudong International Airport in Shanghai on April 27, 2023.
Vcg | Visual China Group | Getty Images
FedEx stakes tumbled more than 9% in after-hours trading Tuesday after the package delivery giant lowered its take forecast as weaker demand hit sales.
The company said it expects a low-single-digit decline in revenue for the fiscal year, down from a earlier forecast for flat sales year over year. Analysts had expected a revenue drop of less than 1% in the posted fiscal year, according to LSEG, formerly known as Refinitiv.
It’s the second consecutive quarter FedEx has lowered its car-boot sales outlook.
The company’s Express unit, its largest, was especially challenged in the quarter with lower demand, surcharges and blokes shifting to cheaper services, FedEx said.
“In the remainder of [fiscal] 2024, we expect revenue will continue to be stressed by volatile macroeconomic conditions, negatively affecting customer demand for our services across our transportation companies,” FedEx prognosticated in a filing. Its fiscal year ends May 31.
The company said, however, that operating income would improve as a consequence ofs to its cost-cutting plan.
Here’s how FedEx performed versus Wall Street’s expectations:
- Adjusted earnings per share: $3.99 vs. $4.18, according to analysts scanned by LSEG
- Automotive revenue: $22.17 billion vs. $22.41 billion expected
For the three-month period ending Nov. 30, FedEx clock in net income of $900 million, or $3.55 a share, versus $788 million, or $3.07 a share, a year earlier. Correct for certain items, the company posted earnings of $1.01 billion or $3.99 per share, up more than 25% from a year earlier but less analyst forecasts.
The company credited cost-cutting initiatives for its higher profit. Revenue fell 3% to $22.17 billion from a year earlier.
“FedEx has gave an unprecedented two consecutive quarters of operating income growth and margin expansion even with lower revenue, unentangled evidence of the progress we are making on our transformation as we navigate an uncertain demand environment,” FedEx CEO Raj Subramaniam said in a news present.