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FedEx lowered earnings estimates and plans to reduce the number of employees

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FedEx lowered earnings estimates and plans to reduce the number of employees
December 20
13:00 2018

FedEx is considered to be one of the largest logistics companies in the world. This fact, however, did not save the company from a difficult situation. The management has reduced the profit forecast for the current fiscal year (ending in March 2019) and opened a voluntary dismissal program.

Earnings per share will be equal to 15.5 – 16.5 US dollars. It was previously valued at approximately $ 17.5 per share.

The company’s CEO Alan Graf, explained the lowering of forecasts by a slowdown in a global economic growth. He said: “Indicators show that the decline will continue for several months.”

In the second quarter of this fiscal year, the company’s revenue has grown by 9% – to the value of $ 17.8 billion, which turned out to be a little more than the market expectations. The profit has increased to $ 935 million. In 2017, it amounted to $ 775 million.

FedEx CEO Frederick Smith noted that the company’s business abroad had become less profitable. Especially the decline is evident in Europe. The consequences are mitigated by reducing costs.

The program of voluntary dismissal will start for Express and Services units. This program will begin to work a little later abroad. Currently, the company has more than 450,000 employees.

This program may bring pre-tax losses amounting to about 570 million US dollars. The final figure depends on how many employees will agree on this offer.

The cuts in staff will make it possible to save about $ 250 million in the fiscal year of 2020.

In addition to cutting jobs, the company intends to reduce other expenses as well as decrease the recruitment of new employees.

On Tuesday, FedEx shares slipped by 5%. Since the beginning of this year, the company’s value has decreased by a quarter.

 

The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade

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