FedEx shares fall: Q2 Earnings Miss(Profit Falls Short)

FedEx faces a significant drop in shares after posting lower-than-expected fiscal second-quarter profit and reducing its full-year sales outlook due to volatile economic conditions.

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FedEx shares fall: FedEx (FDX) – Get Free Report shares fell in early Wednesday trade after the package-delivery behemoth reported lower-than-expected fiscal second-quarter profit and lowered its full-year sales forecast due to “volatile” economic circumstances.

Adjusted earnings for the three months ended November were $3.99 per share, a 25.5% increase over the year-ago period but less than the Wall Street average projection of $4.20 per share.

Revenue declined 2.7% year on year to $22.2 billion, falling short of analysts’ expectations of $28.41 billion.

Despite this, the group continued to reclaim market share from its larger rival, United Parcel Service (UPS) – Get Free Report, despite that company’s months-long labor dispute and truck firm Yellow’s Chapter 11 bankruptcy filing.
FedEx Ground, the group’s profit center, saw sales increase 3% year on year, while operating profit increased 51%. Meanwhile, FedEx Express revenue declined 6% due to “market contraction and lower fuel and demand surcharges.”

FedEx’s fiscal year profitability outlook remains unchanged.

FedEx expects a single-digit percent reduction in revenue in the current fiscal year, compared to its previous prediction of flat revenue growth with 2023 levels.

The profits expectation remained unchanged, at $17 to $18.50 per share, excluding pension and efficiency charges.

“The reaffirmation of our earnings outlook despite the weaker demand environment reflects the continued benefits of our transformation,” Chief Financial Officer John Dietrich said on a conference call with investors late Tuesday.

“We’ll continue to closely monitor the global demand environment and other key factors including inventory restocking, inflation, and e-commerce trends, which informs our view of overall expected performance.”

“We now forecast materially lower revenue but expect to achieve the same net profit impact of $500 million at the midpoint as we proactively manage volume-related expenses and revenue quality in this difficult demand environment,” he went on to say.

FedEx shares were marked down 10.2% in premarket trading, indicating an opening-bell price of $251.50 per share.

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