October 5, 2022

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FedEx released preliminary results for the three months to August 31, which were weaker than analysts had expected © REUTERS

FedEx canceled its guidance for fiscal year 2023 after the company, which is seen as a leader in global economic growth, said the recent deterioration in business conditions continued into the current quarter.

The update, which came a week before FedEx announced its fiscal first-quarter earnings, sent shares down more than 15 percent 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 had expected, and blamed “global volume softness” that “accelerated” in the final weeks of the quarter.

The company said it expected further weakness in business conditions in the second quarter, which prompted it to cut its capital spending forecast and withdraw guidance for the remainder of its fiscal year.

“Global volumes declined as macroeconomic trends deteriorated significantly later in the quarter, both internationally and in the United States,” CEO Raj Subramaniam said in a statement. “We are quickly dealing with these headwinds, but given how quickly conditions have changed, first-quarter results are below our expectations.”

In its preliminary results, FedEx reported earnings of $3.33 per share in the first quarter, down 19 percent from a year ago, and well below the $5.14 per share Wall Street had expected. Revenue increased 5 percent from a year ago to $23.2 billion, but was just below analysts’ expectations of $23.6 billion.

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

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FedEx also lowered its forecast for capital spending for the fiscal year to $6.3 billion from $6.8 billion.

Shares fell 15.2 percent in after-hours trading to their lowest level since early August 2020.