FedEx (FDX) reports results for the first quarter

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

Shares in FedEx were up approx. 2% Thursday afternoon.

Last week, the company̵[ads1]7;s stock fell after it posted preliminary revenue and earnings that fell short of Wall Street expectations. Citing a tough macroeconomic environment, CEO Raj Subramaniam said he expects the economy to enter a “worldwide recession.” The company withdrew its guidance for the year and said it would cut costs.

The shipping giant struggled with low volumes in the quarter, citing headwinds in the European and Asian markets. The poor results shocked the market, as investors tried to separate market problems from FedEx’s own internal shortcomings.

In releasing its full first-quarter results on Thursday, the company said express, ground and home delivery rates will increase by an average of 6.9%. FedEx shipping rates will increase by an average of 6.9%-7.9%, the company said.

It also said it believes it will save between $1.5 billion and $1.7 billion by parking planes and reducing flights. Closing certain locations, suspending some Sunday operations and other spending actions will save FedEx Ground between $350 million and $500 million, according to the company.

FedEx said it will save an additional $350 million to $500 million by reducing vendor usage, delaying projects and closing office space.

“We are moving with speed and agility to navigate a difficult operating environment, pulling cost, commercial and capacity levers to adjust to the effects of reduced demand,” Subramaniam said.

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

Despite its grim warning last week, FedEx stood by its 2025 forecasts released in June. The company expects annual revenue growth of between 4% and 6% and growth in earnings per share of between 14% and 19%.