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FedEx scrapped its guidance for fiscal 2023 after the company, considered a bellwether for global economic growth, said a recent deterioration in business conditions had continued into its current quarter.
The update, coming a week before FedEx is due to report earnings for its fiscal first quarter, prompted shares to fall more than 15 per cent in after-hours trading on Thursday to their lowest level in more than two years.
FedEx released preliminary results for the three months to August 31 that were weaker than analysts expected, blaming “global volume softness” that “accelerated” in the final weeks of the quarter.
The company said it expected business conditions to further weaken in the second quarter, prompting it to cut its forecast for capital expenditure and withdraw guidance for the remainder of its fiscal year.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the US,” chief executive Raj Subramaniam said in a statement. “We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first-quarter results are below our expectations.”
In its preliminary results, FedEx reported a profit of $3.33 a share in its first quarter, down 19 per cent from a year ago, and well below the $5.14 a share Wall Street expected. Revenue increased 5 per cent from a year ago to $23.2bn, but was slightly below analyst forecast for $23.6bn.
The company said it expects business conditions to further weaken in the current quarter and forecast revenue to be in the range of $23.5bn to $24bn, with earnings of $2.65 “or greater” a share. Wall Street expected revenue of $24.9bn and earnings of $5.39 a share.
FedEx also cut its forecast for capital spending in the fiscal year to $6.3bn from $6.8bn.
Shares were down 15.2 per cent in after-hours trading to their lowest level since early August 2020.