FedEx Corp. saw its shares plummet over 5% in aftermarket trading on Thursday, following the company’s revised full-year guidance due to intensifying macroeconomic headwinds and uncertainty in the US industrial economy.
The package giant cut its revenue forecast for the year, citing a decrease in demand for higher-margin B2B shipping services. FedEx now expects revenue to be flat to slightly down compared to the previous outlook of flat revenue. The company also reduced its estimated earnings per share range from $19 to $20 to $18 to $18.60.
The US tariffs and tariff threats are a major concern, with potential retaliation and worries about decreased consumer demand due to higher import prices. FedEx reported mixed results for the third quarter, with revenue increasing 1.9% to $22.2 billion but adjusted operating income missing consensus estimates by 12 cents.
Despite this, FedEx attributed better profitability to three factors: the Drive network transformation, which aims to cut costs; higher pricing across transportation segments; and increased volume at FedEx Express. The company generated a 17% gain in adjusted operating income for FedEx Express, driven by greater US and international export volume.
However, the company’s freight segment struggled, with operating income falling 23% due to lower fuel prices and reduced yields. FedEx Freight is set to be spun off into a separate less-than-truckload company later this year.
Source: https://www.freightwaves.com/news/fedex-says-economic-uncertainty-slowing-parcel-and-freight-demand