FedEx cuts costs in face of weak European market

FedEx has cut its profit forecast for the year, blaming weakness in its European markets. And it has set out a cost reduction plan to mitigate the impact, including capacity reductions in its international network.

In its second quarter to 30th November, revenue was $17.8bn – up from $16.3bn the year before. Operating income was $1.17bn, compared to $1.12bn in 2017.

“FedEx is in the midst of another record-setting holiday season, and we salute our more than 450,000 team members worldwide for delivering outstanding customer service,” said Fred Smith, chairman and chief executive officer.

“While the US economy remains solid, our international business weakened during the quarter, especially in Europe. We are taking action to mitigate the impact of this trend through new cost-reduction initiatives.”

CFO Alan Graf pointed out that global trade had slowed in recent months “and leading indicators point to ongoing deceleration in global trade near-term.”

“These trends, coupled with the change in service mix at FedEx Express, are negatively impacting the segment’s financial results. We remain committed to actively managing costs with a heightened focus on increasing efficiency across the organisation.”