FedEx Corp has pulled the full-year financial guidance it issued just three months ago after forecasting below-forecast first-quarter revenue and profit as a global demand slowdown accelerates.
Shares in the global delivery firm dropped over 16% in after-hours trade on Thursday following the news.
A worldwide slowdown in economic activity caused shortfalls in FedEx Express revenues of $500 million and FedEx Ground revenues of $300 million in its first quarter, the company said.
FedEx noted that it expects to report revenue of $23.2 billion for the first quarter, missing analysts' expectations of $23.59 billion, while adjusted earnings are expected to be $3.44 per share, well below estimates of $5.14.
The company said it was cutting costs including shutting some FedEx Office locations, reducing labor hours and consolidating some sorting facilities.
FedEx said its said business has been hit by service challenges in Europe and macroeconomic issues in Asia as the region's biggest economy, China grapples with fresh COVID-19 lock downs and heat wave-induced power outages.
FedEx's new chief executive officer, Raj Subramaniam said in a statement: “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the US. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations."