FedEx (FDX) -) shares fell sharply lower in early Wednesday trading after the package-delivery giant posted softer-than-expected fiscal-second-quarter profit and slashed its full-year sales outlook amid what it called "volatile" economic conditions.
FedEx said adjusted earnings for the three months ending in November, the group's fiscal second quarter, came in at $3.99 a share, a 25.5% leap from the year-earlier period but shy of the Wall Street consensus forecast of $4.20 per share.
Revenues fell 2.7% from last year to $22.2 billion, missing analysts' estimates of a $28.41 billion tally, although the group did continue to win back market share from its larger rival, United Parcel Service (UPS) -), amid that group's months-long labor dispute as well as the Chapter 11 bankruptcy filing of truck group Yellow.
FedEx Ground, the group's profit center, saw revenue rise 3% from a year earlier with operating profit surging 51%. Revenue at FedEx Express, meanwhile, fell 6%, driven by "market contraction and lower fuel and demand surcharges."
Fedex fiscal-year earnings forecast unchanged
Looking into the group's current fiscal year, FedEx sees a single-digit-percent decline in revenue, compared with its prior forecast of revenue growth flat with 2023 levels.
The earnings forecast was unchanged at $17 to $18.50 per share, a tally that excludes pension and efficiency costs.
"The reaffirmation of our earnings outlook despite the weaker demand environment reflects the continued benefits of our transformation," said chief financial office John Dietrich during a late Tuesday investor call. "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 added.
FedEx shares were marked 10.22% lower in early Wednesday trading to change hands at $251.47 each, a move that would trim the stocks' six-month gain to around 8.6%.
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