FedEx (NYSE: FDX) shares fell 24% Friday morning after the company posted disappointing preliminary Q1 earnings and withdrew its full-year guidance on Thursday. The volatile economy, specifically in Asia and Europe has negatively impacted FedEx’s express delivery business as demand for packages weakened during the final weeks of the quarter.
The multinational conglomerate holding company reported earnings of USD3.44 per share, compared to the expected USD5.14 a share. Revenue amounted to USD23.2 Billion, lower than analysts anticipated USD23.59 Billion. Additionally, the company reduced its forecast for capital expenditure for the year by USD500 million to USD6.3 Billion.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S.” FedEx CEO Raj Subramaniam warned in the release. “We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations.”
FedEx is implementing cost-cutting measures including reducing flights, temporarily parking aircraft, closing more than 90 FedEx office locations, and postponing hiring plans.
“We are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives,” Subramaniam added.
For its second fiscal quarter, the company expects earnings of at least USD2.75 per share as well as revenue ranging from USD23.5 Billion to USD24 Billion. According to Refinitiv, Wall Street analysts had forecast Q2 earnings of USD5.48 per share and revenue of USD24.86 Billion.