FEDEX cut the top end of its full-year profit outlook and reported quarterly earnings below expectations on softer demand for package deliveries.
In what chief executive officer Raj Subramaniam called “a challenging quarter”, the Memphis-based company said it was hurt by lower demand for priority services as customers traded down to cheaper shipping options.
FedEx shares slid as much as 14 per cent after the close of regular trading and were down 8.91 per cent to US$273.5 as at 4.38 pm in New York. Rival United Parcel Service fell 2.8 per cent.
The earnings report comes a day after the Federal Reserve made its first interest rate cut since 2020, a policy shift that reflects growing concern about the labour market as job gains have slowed and inflation cools. FedEx is considered somewhat of an economic bellwether due to its wide exposure to industries stretching across the global economy, from retail to manufacturing.
Adjusted earnings for the current fiscal year will be US$20 to US$21 a share, the company said on Thursday (Sep 19), below its previous forecast for as much as US$22 a share.
FedEx is in the process of integrating its Ground and Express delivery networks as part of a wider cost-cutting drive. Subramaniam said the company remains on track for savings of US$2.2 billion this fiscal year.
For the quarter ending Aug 31, it reported adjusted earnings per share of US$3.60, well below analyst expectations for US$4.77 and the US$4.37 it reported a year ago. Revenue came to US$21.6 billion, slightly below the US$21.9 billion estimated by analysts.
This marks the first quarter that FedEx used new reporting segments after consolidating its Express, Ground and Services operating companies on Jun 1. BLOOMBERG
