FedEx cargo plane
Leslie Josephs | CNBC
FedEx on Tuesday said its quarterly profit and sales were down from a year earlier and warned of continued weakness in demand, but said its “aggressive” cost-cutting measures would soften the blow.
The package delivery giant’s net income fell to $788 million for the three months ended November 30, compared to $1.04 billion a year earlier. Revenue fell to $22.8 billion during the period from $23.5 billion a year earlier, falling short of estimates.
Adjusted for one-time items, FedEx posted earnings per share of $3.18, ahead of analysts’ estimates but well below the $4.83 per share reported for the same period last year.
Here’s how FedEx performed for the second quarter of fiscal 2023 versus Refinitiv consensus estimates:
- Earnings per share: Adjusted $3.18 vs. $2.82 expected
- Revenue: $22.8 billion versus $23.74 billion expected
In September, FedEx announced cost-cutting measures, including parking aircraft and closing some offices. It also increased package delivery rates. The company withdrew guidance at the time, and CEO Raj Subramaniam warned the economy was entering a “worldwide recession.”
FedEx said Tuesday it will be able to cut an additional $1 billion beyond September projections, bringing the total savings for fiscal 2023 to $3.7 billion compared to its previous plan for the year – to bring dollars.
“Our teams have an unwavering focus on quickly implementing cost savings to improve profitability,” said Michael Lenz, FedEx CFO, in a earnings release. “As we move into the second half of our fiscal year, we are accelerating our progress on cost measures and helping to offset ongoing global volume weakness.”
FedEx forecast full-year earnings per share of between $13 and $14, below analysts’ expectations of $14.08 per share.
Shares of the company are down about 36% by the end of the year on Tuesday, compared to the S&P 500’s about 20% decline.
FedEx executives will host a conference call with analysts at 5:30 p.m. ET to discuss the results. You’re likely to be faced with questions about the global economy, holiday travel demand and reliability, and costs for the coming year.
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