FedEx warns that fixed markets could be ‘first in a series’: Analyst

FedEx’s bad news may be just the beginning. The package delivery giant rocked the market with a profit warning on Thursday night that sent its shares down more than 20%, their biggest-ever daily drop.

Ipek Ozkardeskaya, senior analyst at Swissquote, said the announcement was “like a slap” and a “solid sign that the economy is starting to slow”.

It is also, she added“the first in a series of warnings that we may see in the coming quarters.”

She is not alone in her sense of anticipation. Carl Riccadonna, chief US economist at BNP Paribas, told MarketWatch Friday, “You’ll see more businesses talking about a slowing economy, less pricing power.” Some companies can “defy the math”, Mr. tell the storebut ultimately macroeconomic trends drive the microeconomic story.

“The compression of profits and the need to liquidate inventory” will result in companies needing to “lower prices,” he added.

FedEx CEO Raj Subramaniam, for his part, did not hold back on doom and gloom. When asked on CNBC if a “global recession” is underway, he replied: “I think so; the numbers don’t represent very well. We’re seeing a slump. volume declines in every segment around the world, so at this point we are just assuming that economic conditions will not be good.”

His company’s poor results are “a reflection of everyone else’s business,” he added on a particularly ominous note.

He has a point: FedEx, with the vast amount of items it ships around the world, has long been seen as a enabler of global economic growth.

The company was expected to announce its first-quarter earnings on September 22, but opted to release earnings ahead of time, unsurprisingly as its actual results fell short of forecasts and expectations.

In its warning, FedEx said it expected business conditions to continue to weaken, adding it would withdraw guidance for the remainder of the fiscal year. It blamed the underperformance on “global volume weakness” that “accelerated” in the final weeks of the quarter.

“We are quickly addressing these difficulties, but given the rate of change in conditions, first-quarter results were below our expectations,” Subramaniam said in a statement. Father. “While this performance has been disappointing, we are actively accelerating cost reduction efforts and evaluating additional measures to improve productivity, reduce variable costs, and implement initiatives.” structural cost reduction”.

The company also said it will delay hiring, reduce flight frequency, close 90 office locations and reduce capital spending by $500 million next year.

Register Fortune feature email list so you don’t miss our biggest features, exclusive interviews and surveys.

Source link


News5h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button