FedEx stock tanks after company pulls out, says year is about to get worse

FedEx Corp. shares fell nearly 17% in the extended session Thursday after the logistics company withdrew its outlook for the year, called for significantly lower quarterly profit and revenue, and said fiscal 2023 is shaping up to be worse.

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the first quarter of the financial year was affected by lower volumes globally, a trend that worsened towards the end of the quarter. It expects business conditions to “weaken further” in the second quarter of the financial year.

The company called for preliminary fiscal-adjusted earnings of $3.44 per share on sales of $23.3 billion.

Analysts polled by FactSet expect the company to report adjusted EPS of $5.1[ads1]4 on sales of $23.6 billion in the quarter when it reports a full financial snapshot on Sept. 22. FedEx said it will offer an updated outlook and details on its cost-cutting plans then.

FedEx blamed “macroeconomic weakness” in Asia and “service challenges” in Europe for a $500 million revenue shortfall in those regions. Also, FedEx Ground revenue is about $300 million below the company’s forecasts, the company said.

FedEx vowed to cut costs “aggressively” and said it was considering other ways to “increase productivity.”

Among other moves, FedEx said it will close more than 90 FedEx offices as well as five corporate offices, and delay new hires.

Just three months ago, FedEx gave investors a better outlook for fiscal 2023.

In June, the company said its FedEx Express business improved in part thanks to fuel surcharges. But it warned even then that volumes were low globally due to pandemic shutdowns and economic and geopolitical uncertainty in Asia and beyond. It also reported lower FedEx Ground operating results.

In addition to withdrawing its fiscal 2023 outlook, FedEx called for second-quarter revenue between $23.5 billion and $24 billion, and adjusted EPS of $2.75 “or more.” That contrasts with expectations for EPS of $5.48 on sales of $24.9 billion in the quarter, according to FactSet.

FedEx cut capital spending to $6.3 billion, compared with an earlier forecast of $6.8 billion. The company kept its $1.5 billion buyback plan intact, saying it expects to buy back $1 billion in the fiscal second quarter.

FedEx shares have lost 21% so far this year, compared with losses of about 16% for the S&P 500 index. SPX,

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