(Boursier.com) — FedEx will experience a painful session on Wall Street this Wednesday. The stock fell 10% after the market yesterday evening, following quarterly results lower than market expectations. For the quarter ended November, the shipping giant posted revenue of $22.17 billion, down 3% year-over-year, while its adjusted earnings per share missed consensus at $3.99, down from 3 .18$ a year earlier. Analysts on average expected revenue of $22.3 billion and adjusted earnings per share of $4.14. It is therefore a double disappointment. Adjusted profit, however, recovered by 23% to more than a billion dollars, but this remains insufficient compared to market estimates.
Quarterly operating profit at the Express air unit fell 60% as volumes fell at the U.S. Postal Service, which shifted more packages to more economical ground services. FedEx is negotiating the renewal of the US Postal Service contract with a view to improving its profitability. “I am confident that Express’s margin will come back, once the company restructures its operations and demand returns,” FedEx Chief Executive Raj Subramaniam said at the presentation conference last night. Operating profit for FedEx’s Ground division fortunately increased by 51% for the past quarter.
The group lowers its annual revenue forecast just before the crucial holiday season. Management believes that revenues will continue to be affected by volatile macroeconomic conditions, which are weighing on customer demand. For the fiscal year ending at the end of May 2024, FedEx now projects a low-single-digit decline in revenue, while previously targeting relative stability. As a consolation prize, the group plans to buy back $1 billion worth of additional shares during the financial year. Annual adjusted earnings per share are expected between $17 and $18.5, before accounting adjustments related to retirement plans and costs of business optimization initiatives.
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