Parcel delivery giant FedEx has withdrawn its full year earnings guidance and reported preliminary first quarter results that fell short of Wall Street estimates, citing “global volume softness” as the cause.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations,” said Raj Subramaniam, FedEx Corporation president and chief executive officer.
Furthermore, when interviewed on CNBC on Thursday [15 September] Subramaniam said he believed a global downturn is impending.
The parcel delivery firm will close offices, pause recruitment, reduce air cargo flight frequencies and temporarily park aircraft in a bid to mitigate the effects of reduced demand throughout the remainder of fiscal 2023. It was also reduce Sunday operations at a number of FedEx ground locations.
“While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives. These efforts are aligned with the strategy we outlined in June, and I remain confident in achieving our fiscal year 2025 financial targets,” Subramaniam added.
The announcement knocked FedEx shares down by more than 20% in pre-market trading, to their lowest level in more than two years. It also impacted rival parcel firms with UPS, Amazon and XPO Logistics seeing shares dropping. Royal Mail’s fell by 10.2%, and Germany’s Deutsche Post dropped 4.6% following the news.