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FedEx closing some offices, parking some planes and freezing hiring as CEO plans for recession news

FedEx closing some offices, parking some planes and freezing hiring as CEO plans for recession

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By CNBCTV18.com Sept 16, 2022 8:04:20 PM IST (Updated)

FedEx CEO Raj Subramaniam has said weakening global shipment volumes drove disappointing first quarter numbers. The Memphis-based company has warned that business conditions could further weaken amid weaker global volume.

FedEx CEO Raj Subramaniam feels a recession is impending for the global economy and that the company is witnessing volume decline in every segment worldwide.

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Speaking to CNBC’s Jim Cramer, Subramaniam, who took over the top job in June, said weakening global shipment volumes drove disappointing first quarter numbers for FedEx. “I’m very disappointed in the results that we just announced,” Subramaniam said.


FedEx said it would be closing stores and corporate offices and putting off new hires to offset declining volumes of packages moving around the world.

FedEx would be closing 90 office locations and five corporate offices, deferring new hires, parking some cargo aircraft, and reducing Sunday ground operations, Wall Street Journal quoted Subramaniam as saying. He did not say if the company was cutting its workforce.

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

When asked whether the economy is “going into a worldwide recession”, Subramaniam said, “I think so. But you know, these numbers, they don’t portend very well.”

The Memphis-based company has warned that business conditions could further weaken in the ongoing quarter amid weaker global volume.

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

FedEx Ground's revenue fell about $300 million below company forecasts. The segment mostly handles e-commerce deliveries in the US. On the other hand, FedEx Express's business fell because of European challenges and weaker economic trends in Asia. The segment witnessed a roughly $500 million revenue shortfall.

Overall, FedEx expects revenue to sand at $23.2 billion and earnings per share to be $3.33. This is against Wall Street’s expectations of $23.6 billion in revenue in the first quarter and earnings of $5.14 per share, according to FactSet.

FedeEx fell 21.2% after warning investors that profits for its fiscal first-quarter will likely fall short of forecasts because of a dropoff in business. It is also shuttering storefronts and corporate offices and expects business conditions to further weaken.
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