FedEx Corp. late Tuesday cut its fiscal 2024 revenue forecast, saying it now expects a single-digit year-on-year revenue decline instead of flat revenue.
The revision, included in its fiscal second-quarter financial results, sent shares plunging more than 8.5% in early after-hours trading.
The company (NYSE: FDX) upped its full-year guidance for diluted earnings per share, now saying it will come in at a range of $15.35 to $16.85 per diluted share from $15.10 to $16.60 per diluted share.
For the quarter, revenue of $22.2 billion was down $600 million from the year-earlier period, as the company continued to grapple with sluggish demand. Adjusted operating income rose 17% to $1.42 billion due to efficiency improvements and a more profitable revenue mix. Adjusted net income came in at $1.01 billion from $820 million.
FedEx Express, the company’s air and international unit, posted lower operating income due to lower revenue. The revenue drop was a result of reduced demand, lower delivery surcharge revenue and a shift toward lower-yielding services.
FedEx Ground, the company’s U.S. ground parcel delivery unit, posted higher operating income due to higher volumes and yield improvement.
FedEx Freight, the company’s less-than-truckload unit, posted an increase in operating income despite a decline in revenue due to fewer shipments.
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Joe
The company is pricing itself out. All the surcharges. Bad service. Change of service commitments at the last minute. Customers are finally getting sick of it.
Bryan Scherer
FedEx CEO Raj Subramaniam is responsible for this fiasco. He implemented a 2 year business plan that mainly involves phasing out the Express division and replacing these employees with 3rd party contractors (Ground division). FedEx is terminating thousands of dedicated Express employees, some with over 25 years of service, in favor of people who are paid $10-15/hr less and receive no company benefits. These replacement drivers have no loyalty to the company and are apathetic when it comes to service and quality and it shows on a daily basis. Subramaniam’s plan to convert all FedEx’s business to the Ground division is tanking the company.