FedEx announced Q2 results

FedEx Corp. stakeholders are still digesting the calamity of announcement of a massive quarterly income shortfall at its largest unit. No one disputes that the international macro environment has taken a turn for the worse.  In the announcement, executives pinned much of the blame on weakness in trans-Pacific air volumes that accelerated toward the end of its fiscal 2023.

The current problems center on FedEx Express, the company’s air and international unit and the largest of its three units. The unit posted a $572 million year-on-year decline in operating income, even though revenues were slightly higher during the same period. The waterfall drop contributed heavily to a sharp drop in the parent’s adjusted earnings per share to $3.44 from a consensus of around $5.14. FedEx said the Express unit experienced a $500 million quarterly revenue shortfall. FedEx Ground, the company’s ground delivery unit, needs to completely eliminate its costly Sunday delivery program. In general, FedEx puts too much emphasis on revenue growth — which is out of any carrier’s control.

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