FedEx CEO Raj Subramaniam has warned the economy is “going into a worldwide recession.”
During an interview with Jim Cramer of CNBC, Subramaniam elaborated on his company’s decision to pull guidance.
“I think so. But you know, these numbers, they don’t portend very well,” Subramaniam said.
FedEx’s top executive said declining worldwide cargo volumes were a driving factor behind the company’s unsatisfactory performance.
“I’m very disappointed in the results that we just announced here, and you know, the headline really is the macro situation that we’re facing,” the FedEx CEO said.
The CEO said the drop in volumes was a reflection of the economy as a whole:
“We are a reflection of everybody else’s business, especially the high-value economy in the world,” he concluded.
Watch
On Thursday, FedEx announced it was withdrawing its fiscal year 2023 earnings forecast due to the preliminary 1Q financial performance.
FedEx Express results were hit by macroeconomic weakness in Asia and also challenges in Europe regarding service. This led to a $500 million revenue shortfall.
Specifically for Q1:
FedEx prelim 1Q adj EPS $3.44, est. $5.10
FedEx prelim 1Q Rev. $23.2B, est. $23.54B
FedEx prelim 1Q Adj. oper income $1.23B, est. $1.74B
The firm also added it was moving to cut costs:
The firm also added it was moving to cut costs:
“While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives,” Subramaniam said.
These efforts are aligned with the strategy we outlined in June, and I remain confident in achieving our fiscal year 2025 financial targets.”
FedEx will close 90 office locations, defer hiring efforts, reduce flights, and close five corporate office facilities.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations,” Subramaniam said.
“While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives,” he added.
“These efforts are aligned with the strategy we outlined in June, and I remain confident in achieving our fiscal year 2025 financial targets.”
Just like Joe Biden said, we’re not in a recession.
