October 1, 2022

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FedEx posted preliminary results for the three months to August 31 that were weaker than analysts expected © REUTERS

FedEx cut guidance for fiscal 2023, the company seen as a bellwether for global economic growth, saying the recent decline in business conditions continued into its current quarter.

The update, which came a week before FedEx is due to report earnings for its fiscal first quarter, sent shares plunging more than 15 percent in after-hours trading Thursday, hitting their lowest level in more than two years.

FedEx posted preliminary results for the three months to Aug. 31 that were weaker than analysts expected, blaming “global volume softness” in the final weeks of the quarter.

The company said it expects business conditions to weaken further in the second quarter, prompting it to cut its forecast for capital spending and withdraw guidance for the remainder of its fiscal year.

“Global volumes declined as macroeconomic trends worsened significantly during the quarter both internationally and in the US,” Chief Executive Officer Raj Subramaniam said in a statement. “We are quick to note these headwinds, but given the speed with which conditions have changed, first-quarter results have fallen short of our expectations.”

In its preliminary results, FedEx reported first-quarter earnings per share of $3.33, down 19 percent from a year ago and below the $5.14 Wall Street was expecting. Revenue was up 5 per cent from a year ago to $23.2bn, but slightly below analyst forecasts of $23.6bn.

The company said it expects business conditions to weaken further in the current quarter and expects earnings per share to be $23.5bn to $24bn with earnings of $2.65 “or higher”. Wall Street expected revenue of $24.9bn and earnings per share of $5.39.

FedEx lowered its forecast for capital expenditure for the financial year to $6.3bn from $6.8bn.

Shares fell 15.2 percent in after-hours trade, the lowest since early August 2020.