FedEx anticipates trade disputes and an economic slowdown around the globe could have severe consequences for its operations next year.
The company significantly reduced its profit stance for the full year, ending on May 30, declining it from 7% to 10%. He had just raised his predictions three months ago. Although FedEx operations remain strong in the United States, international activities, particularly in Europe, have weakened significantly in the past three months.
“The Chinese economy is partially weakened by trade disputes,” said Fred Smith, CEO.
In an attempt to control costs in the event of an economic slowdown, FedEx said on Tuesday it would offer buyout to US employees and reduce its hiring plans. It also considers an offer to buy out for international employees. The company’s new viewpoint has resulted in a 7% drop in FedEx’s share in the premarket on Wednesday. FedEx shares have already been more than 25% lower than the news this year.
FedEx is working great at present. The company stated that it projects to have record breaking deliveries during the holiday season. Revenues and profits for the fiscal Q2, which ended Nov, have increased. But the profit margin was slightly less in contrast to previous year.
The company did not specify the number of jobs it hoped to eliminate, but the reduction should be large enough to cut costs by $225 Million to $ 275 Million per year. FedEx has more than 450,000 employees around the world, which is around 25,000 more jobs than at the end of May.
“We expect that FedEx’s total employment will surge in coming years, assuming reasonable economic growth,” Smith said. But he added that by buying back, the company can now advance its productivity.
Increasing the use of advanced technologies, including accounting robots, legal systems analysis, and predictive artificial intelligence, is another key factors to improve productivity, Smith said.
