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What’s happening: Shares of FedEx Corporation fell in after-hours trading on Tuesday, following the release of its fiscal fourth-quarter results.
What happened: Although FedEx reported better-than-expected quarterly earnings, it issued a muted profit outlook for the fiscal year.
The express package delivery company also made an important announcement for saving costs.
How were the results: The company reported the third straight decline in quarterly sales.
Why it matters: FedEx has seen a steep rise in package volumes in the recent years due to a sharp increase in online shopping during the pandemic. The reversal of this trend has resulted in a decline in the company’s overall volumes.
Sales at the company’s Express unit fell 13% to $10.4 billion, while the Ground unit reported quarterly sales of $8.3 billion, a 2.3% decline from a year ago.
FedEx’s adjusted operating margins came in at 8.1%, down from 9.2% in the year-ago quarter.
The company noted that its quarterly results included 21 cents per share in a non-cash impairment charge due to its decision to permanently retire 18 aircraft and 34 related engines from service. The results also included 17 cents per share in charges for goodwill and other asset impairment associated with its acquisition of ShopRunner.
With sales declining for the third consecutive quarter, the company is now focussing on reducing its overall expenses to improve profitability. Management announced a plan to save over $100 million in costs during fiscal 2025. With tough competition from United Parcel Service and Amazon, FedEx said it would merge its Ground unit in Canada into its company-operated Express division.
For fiscal 2024, management guided to earnings of $16.50 to $18.50 per share, compared to market estimates of $18.36 per share. FedEx also has plans to repurchase $2 billion worth of its common stock during the year.
The company also announced the retirement of its CFO Michael Lenz, effective July 31. FedEx did not name his successor but said Lenz will continue as a senior advisor at the company until the end of the year.
How shares responded: FedEx’s shares fell 3.1% to $224.50 in after-hours trading on Tuesday, after the release of quarterly results. The stock has added around 1% over the past month.
What to watch: Investors will monitor the merger of the company’s FedEx Express and Ground operations in Canada and the resulting cost savings.
Context: The GBP/USD forex pair traded lower on Tuesday, with investors awaiting the Bank of England’s monetary policy meeting.
Details: The Bank of England is scheduled to announce its policy decision this week, with official inflation data due to be released today.
Britain’s consumer prices fell to 8.7% in April, compared to 10.1% in March, recording the lowest rate since March 2022. Inflation in food & non-alcoholic beverages remained close to March’s record high in April.
Grocery inflation in the country fell slightly in June, but remained in double digits, according to data from market researcher Kantar.
The release of inflation data is expected to impact the central bank’s monetary policy decision on Thursday. Markets widely expect the BoE to increase interest rates by 25 basis points, while there are growing speculations of a hike of 50 basis points.
The European Central Bank raised its interest rates by 25 bps at its latest meeting. President Christine Lagarde said the bank might increase rates again in July.
The GBP/USD forex pair fell around 0.2% to 1.2765 on Tuesday.
What are expectations: Traders await consumer price inflation and producer price data from the UK today. The country’s consumer price inflation, which fell to 8.7% in April, is expected to ease further to 8.5% in May. Analysts expect factory gate prices of goods produced by manufacturers to decline sharply to 4.1% in May, from 5.4% in April.
Other Markets: US trading indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.72%, 0.47% and 0.09%, respectively.
Russia accused Ukraine of planning to attack the Crimea Peninsula with long-range US and British missiles. Despite the ongoing tensions, the RUB/USD remained broadly flat in forex training this morning.
Australia’s Westpac-Melbourne Institute Leading Economic Index came in flat versus the previous month in May, lending support to the AUD/USD forex pair.
South Korea’s producer prices rose by 0.6% year-over-year in May, after a 1.6% rise in the prior month, which sent the KRW/USD pair lower in forex trading this morning.
Colombia’s economy contracted by 0.8% year-over-year in April, versus 1.5% growth in the previous month. However, the country’s services sector growing by 0.8% lent support to the COP/USD forex pair.
Japan’s Reuters Tankan sentiment index for manufacturers rose to +8 in June, from May’s reading of +6. However, the JPY/USD pair fell in forex trading this morning.
European Union’s new passenger car registrations, UK’s public sector net borrowing and CBI industrial trends orders, Turkey’s business confidence and capacity utilization, Italy’s construction output, South Africa’s inflation rate, US MBA mortgage applications, Redbook index, Fed Chair Powell testimony, Fed Cook testimony and Fed Jefferson testimony, Mexico’s GDP aggregate demand and private spending, Canada’s new housing price index and retail sales, Russia’s producer prices change, as well as Argentina’s leading economic index and balance of trade.
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