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FedEx dropped its forecast for fiscal year 2023 after the company, seen as an indicator of global economic growth, said a recent deterioration in business conditions continued in its current quarter.
The update, which comes a week before FedEx releases results for its fiscal first quarter, sent shares down more than 15% in after-hours trading Thursday to their lowest level in more than two year.
FedEx released preliminary results for the three months ending Aug. 31 that were weaker than analysts expected, blaming “soft global volume” that “accelerated” in the final weeks of the quarter.
The company said it expected business conditions to weaken further in the second quarter, prompting it to cut its capital spending forecast and withdraw its guidance for the remainder of its fiscal year.
“Global volumes declined as macro trends worsened significantly later in the quarter, both internationally and in the U.S.,” Chief Executive Raj Subramaniam said in a statement. “We are tackling these headwinds quickly, but given the speed at which conditions have changed, the first quarter results are below our expectations.”
In its preliminary results, FedEx reported first-quarter earnings of $3.33 per share, down 19% from a year ago, and well below the $5.14 per share expected by Wall Street. . Revenue rose 5% from a year ago to $23.2 billion, but was slightly below analysts’ forecast of $23.6 billion.
The company said it expects business conditions to weaken further in the current quarter and expects revenue of 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.
FedEx also cut its forecast for capital spending in the fiscal year to $6.3 billion from $6.8 billion.
Shares fell 15.2% in after-hours trading to their lowest level since early August 2020.