(Reuters) – FedEx (FDX) on Thursday reported a decline in first-quarter profit and cut the upper range of its annual profit forecast, as demand in the parcel industry remained weak, particularly for priority services.
The company’s shares fell about 11% to $268.21 after hours.
FedEx and other transportation companies expanded their operations during the pandemic-fueled online shipping boom. Once demand returned to normal, delivery companies laid off workers, closed offices and sorting facilities, and parked trucks and planes to protect margins from excess overhead.
The company cut $1.8 billion in structural costs in fiscal 2024, which ended in May, and plans to cut another $2.2 billion in costs in fiscal 2025.
However, continued cost savings could not offset the negative impact of weak demand for its lucrative priority services in the United States and one fewer business day in the quarter, FedEx said.
The company now expects adjusted operating profit for fiscal 2025 to be between $20 and $21 per share, compared with its previous guidance of $20 to $22 per share.
FedEx reported first-quarter earnings of $3.60 per share, compared with $4.55 per share a year earlier.
(Reporting by Lisa Baertlein in Los Angeles and Ananta Agarwal in Bengaluru; Editing by Shounak Dasgupta)
