(Boursier.com) — FedEx plunged more than 20% before market on Wall Street, after a fairly blunt profit warning. UPS yields more than 6% in its wake… In the quarter ended at the end of August, the first fiscal quarter of 2023, FedEx reported adjusted revenues of 23.2 billion dollars, against 22 billion a year earlier. Estimated adjusted operating profit is $1.23 billion, compared to $1.49 billion a year earlier. Adjusted diluted earnings per share are estimated at $3.44, compared to $4.37 in the first quarter of fiscal 2022. Following this performance, and pending a still volatile operating environment, FedEx is withdrawing its earnings guidance for the 2023 financial year, provided at the end of June. The group will pursue aggressive cost reductions and expects business conditions to weaken further in the second quarter. For that period, FedEx expects revenue of $23.5 billion to $24 billion, diluted earnings per share of $2.65 or more and adjusted EPS of $2.75 or more. The group reaffirms its already announced intention to buy back $1.5 billion of its own shares during the year and $1 billion for the quarter started.
First quarter results were negatively impacted by weak global volumes which accelerated in the last weeks of the quarter. FedEx Express’s results were particularly impacted by macroeconomic weakness in Asia and service difficulties in Europe, causing a shortfall in this segment of approximately $500 million compared to the company’s forecast. FedEx Ground’s revenue was about $300 million lower than the company’s forecast. Although the company took immediate and decisive action to adjust its cost base, the impact of cost measures was slower than volume declines and operating expenses remained elevated relative to demand.
“Global volumes declined as macro trends worsened significantly later in the quarter, both internationally and in the U.S. We are addressing these issues quickly, but given the speed at which conditions have changed, the first quarter results are below our expectations,” said Raj Subramaniam, CEO of the company. “While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to improve productivity, reduce variable costs and implement structural cost reduction initiatives. These efforts are aligned with the strategy we set out in June, and I remain confident that we will achieve our financial targets for fiscal year 2025.”
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