FedEx (FDX) reports first quarter earnings

A person walks by a FedEx van in New York on May 9, 2022.

Andrew Kelly | Reuters

FedEx announced a rate hike on Thursday and detailed its cost-cutting efforts after the shipping giant warned last week that its fiscal first-quarter results were hurt by weaker global demand.

FedEx shares were up about 2% Thursday afternoon.

The company’s shares fell last week after preliminary earnings and revenue fell short of Wall Street expectations. CEO Raj Subramaniam cited a tough macroeconomic environment and said he expected the economy to enter a “global recession.” The company withdrew its guidance for the year and said it would cut costs.

The shipping giant struggled with low volumes in the quarter, citing headwinds in European and Asian markets. The poor results shocked the market as investors tried to distinguish market woes from FedEx’s own internal shortcomings.

In announcing its full first-quarter results on Thursday, the company said its express, ground and home delivery rates rose an average of 6.9%. Its FedEx freight rates will increase by an average of 6.9% to 7.9%, the company said.

He also said he believed $1.5 billion to $1.7 billion would be saved by parking planes and reducing flights. Closing certain locations, suspending some Sunday operations and other cost actions will save FedEx Ground between $350 million and $500 million, according to the company.

FedEx said it will save an additional $350 million to $500 million by reducing supplier utilization, delaying projects and closing offices.

“We are moving quickly and flexibly to navigate a challenging operating environment, pulling cost, trade and capacity levers to adjust to the effects of reduced demand,” Subramaniam said.

By fiscal 2023, the company expects total cost savings of $2.2 billion to $2.27 billion.

Despite last week’s grim warning, FedEx stuck to its June 2025 forecast. The company forecasts annual revenue growth of 4-6% and earnings per share growth of 14-19%.