FedEx (NYSE:FDX) stock sank 12% postmarket on Thursday after the firm reported prelim. Q1 results that widely missed estimates, hurt by global volume softness that worsened in the final weeks of the quarter.

FDX also withdrew its FY23 earnings forecast.

The company expects Q1 adj. EPS of $3.44, well below consensus estimate of $5.14. Q1 revenue is projected to be $23.2B vs. consensus estimate of $23.52B.

FedEx Express results in Q1 were hit by macroeconomic weakness in Asia and service challenges in Europe, resulting in revenue shortfall of ~$500M relative to FDX’s outlook. FedEx Ground revenue was ~$300M below its forecast.

FDX undertook immediate cost cuts to counter weak business conditions, but their impact lagged volume declines.

The company expects business conditions to further weaken in Q2. Q2 adj. EPS is expected to be $2.75 or greater vs. consensus estimate of $5.46. FDX expects Q2 revenue of $23.5B-$24B vs. consensus estimate of $24.87B.

However, the company expects the benefits of cost cuts to offset effects of weaker demand throughout the rest of FY23.

Costs cuts include reduction in flight frequencies, volume-related reductions in labor hours, consolidation of sort operations, cancellation of planned network capacity and other projects, deferral of hiring, and closure of over 90 FedEx Office locations. It also plans to shutter five corporate office facilities.

FDX now expects FY23 capital spending of $6.3B, down from its prior outlook of $6.8B.

The firm reiterated its plan to repurchase $1.5B of stock in FY23 and expects to buy back $1B of stock during Q2.

Shares of FDX declined ~21% YTD.

FDX’s revised guidance sent shares of United Parcel Service (UPS) sliding ~6% after hours on Thursday.

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