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Shares in global shipping giant FedEx fell in pre-market trade this morning after the company reported quarterly results that continued to show strain under the slowing global economy.FedEx said it earned $1.45 per share on net sales of $10.79 billion, slightly ahead of expectations for earnings of $1.40.
“Weakness in the global economy constrained revenue growth at FedEx Express during our first quarter and affected our earnings,” FedEx Chief Executive Frederick Smith said. “We are taking further actions to reduce costs and adjust our networks to match current and anticipated shipment volumes.”
The company’s FedEx Express unit, which accounts for nearly two-thirds of overall sales, lagged freight and ground operations — as customers shifted to lower cost alternatives.
Net income declined 28 per cent within the Express division, while total bottom line results improved one per cent during the period to $459 million.
The Memphis, Tenn., based firm also guided below Wall Street expectations, forecasting second quarter results between $1.30 and $1.45. Consensus estimates were for $1.67.
Full year guidance was also slashed more than 10 per cent to a range of $6.20 to $6.60 per share.
To bolster results, FedEx says it will boost shipping rates by an average of 3.9 per cent.
“Weak global economic conditions dampened revenue growth, drove a shift by our customers to our deferred services and outpaced our near-term ability to reduce FedEx Express operating costs to match demand levels,” the company’s CFO Alan Graf, Jr. said.
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