Fedex closes some offices, parks some planes and freezes hiring as CEO predicts recession

By STI (Update)


FedEx CEO Raj Subramaniam said weaker global shipping volumes led to disappointing first-quarter numbers. The Memphis-based company warned that trading conditions could weaken further amid lower global volume.

FedEx CEO Raj Subramaniam believes a recession is imminent for the global economy and the company is seeing declining volumes in all segments of the world.

Speaking to CNBC’s Jim Cramer, Subramaniam, who took over the top job in June, said weaker global shipping volumes led to disappointing numbers for FedEx in the first quarter. “I am very disappointed with the results that we have just announced,” said Subramaniam.

FedEx said it would close stores and offices and postpone new hires to compensate for lower parcel volumes moving around the world.

FedEx would close 90 offices and five corporate headquarters, defer new hires, park some cargo planes and reduce Sunday ground operations, Subramaniam told the Wall Street Journal, quoting Subramaniam. He did not say whether the company was downsizing.

The CEO said that while the company expected demand to rise after reopening factories in China, which closed due to COVID-19, it actually fell.

When asked if the economy is “going into a global recession”, Subramaniam replied: “I think so. But you know, those numbers, they don’t bode well.

The Memphis-based company warned that trading conditions could weaken further in the current quarter amid weaker global volume.

According to Subramaniam, the company saw weekly declines, which at this point reflected that “the economic conditions are not really good”.

FedEx Ground’s revenue fell about $300 million below the company’s forecast. The segment mainly handles e-commerce deliveries in the United States. In contrast, FedEx Express business fell due to European challenges and weaker economic trends in Asia. The segment recorded a shortfall of approximately $500 million.

Overall, FedEx expects revenue to reach $23.2 billion and earnings per share to be $3.33. That beats Wall Street expectations of $23.6 billion in first-quarter revenue and earnings of $5.14 per share, according to FactSet.

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