A person rides a FedEx truck in New York City, May 9, 2022.
Andrew Kelly | Reuters
FedEx on Thursday announced a rate hike and detailed cost-cutting efforts after the shipping giant warned last week that its first-quarter financial results were hit by demand. weakening global demand.
Shares of FedEx were up about 2% Thursday afternoon.
Last week, The company’s stock has sunk after it posted preliminary revenue and earnings that fell short of Wall Street expectations. Chief Executive Officer Raj Subramaniam cited a difficult macroeconomic environment, and said he expects the economy to enter a “worldwide recession.” The company withdrew its guidance for the year and said it would cut costs.
The shipping giant struggled with light cargo volumes in the quarter, citing struggling European and Asian markets. The bad results shocked the market, like investors tried to distinguish the woes of the market from the internal shortcomings of FedEx.
When it released full first-quarter results on Thursday, the company said Express, Ground, and Home Delivery rates would increase by an average of 6.9%. The company said FedEx Freight rates will increase by an average of 6.9%-7.9%.
They also said they believe they will save between $1.5 billion and $1.7 billion by parking planes and reducing flights. According to the company, the closure of some locations, the suspension of some Sunday operations, and other cost actions will save FedEx Ground between $350 million and $500 million.
FedEx said it will save an additional $350 million to $500 million by reducing supplier utilization, delaying projects and closing office locations.
“We are moving with speed and agility to navigate a challenging operating environment, pulling cost, commercial and capacity levers to adjust to the impacts of demand,” said Subramaniam. demand falls,” said Subramaniam.
In fiscal year 2023, the company projects total cost savings of $2.2 billion to $2.27 billion.
Despite its bleak warning last week, FedEx is keeping its 2025 prediction unchanged from June. The company is forecasting 4% to 6% year-over-year revenue growth and earnings per growth stocks from 14% to 19%.