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By Yasin Ebrahim
Investing.com — FedEx reported Thursday weaker-than-expected fiscal first-quarter results, though pledged to speed up costs and hike shipping rates to offset the impact slowing global growth on shipping volumes.
FedEx Corporation (NYSE:FDX) shares rose 2% following the report.
FedEx announced earnings per share of $3.44 on revenue of $23.2 billion. Analysts polled by CapitalIQ anticipated EPS of $5.14 on revenue of $23.52 billion.
Most of the bad news appeared to have been priced into the stock following a tumble last week when the shipping giant delivered a profit warning.
Operating income declined 69%, driven by an 11% year-over-year reduction in global package and freight volume.
“First quarter consolidated operating results were adversely impacted by global volume softness that accelerated in the final weeks of the quarter due to weakening economic conditions,” the company said. The results were also negatively affected by “service challenges at FedEx Express,” it added.
The company, however, announced a plan to accelerate its cost cutting efforts and hike up shipping rates. FedEx Express, FedEx Ground, and FedEx Home Delivery rates will increase by an average of 6.9% from January. FedEx Freight rates will increase by an average of 6.9% to 7.9%.
In fiscal 2023, the company expects to generate total cost savings of $2.2 billion to 2.7 billion, with about $300 million of these savings realized approximately in the first quarter and approximately $700 million in savings expected to realized in the second quarter.
By fiscal 2025, meanwhile, the company said it expects to generate approximately $4.0 billion in incremental annualized cost savings across its existing network.
Looking ahead, the company forecasts second-quarter earnings of $2.65 per share on revenue of $23.5 billion, compared with Wall Street estimates for $2.80 a share on revenue of $23.78 billion, respectively.
