FedEx Corp. says the global economy is stalling, and it's going to get worse next year.
The world's second largest package delivery company cut its forecast for the fiscal year ending in May, citing slow trade and high fuel prices that are hurting the economy.
A steep decline in Asian exports due to weakness in Europe is causing most of the pain. But consumers and businesses are also choosing to move goods more slowly to save money, which is hurting FedEx's core Express unit.
FedEx said its net income for the current quarter ending in November should fall well below last year's quarter.
The Memphis, Tenn. company also cut its forecast for the full to year to between $6.20 and $6.60 per share, from $6.90 to $7.40 previously. Shares of the company fell nearly 2 percent in early trading.
As the economy slows, FedEx is seeing a drop in demand for more expensive priority services. FedEx customers are chosing to move goods by ship or truck instead of by plane. FedEx hasn't been able to cut costs fast enough to match the decline in express demand.
Fear of a further economic slowdown is driving some of that behavior, but FedEx says steadily increasing fuel prices are also playing a big role.
read more: http://www.latimes.com/business/la-fi-fedex-earns-20120919,0,2891529.story
The world's second largest package delivery company cut its forecast for the fiscal year ending in May, citing slow trade and high fuel prices that are hurting the economy.
A steep decline in Asian exports due to weakness in Europe is causing most of the pain. But consumers and businesses are also choosing to move goods more slowly to save money, which is hurting FedEx's core Express unit.
FedEx said its net income for the current quarter ending in November should fall well below last year's quarter.
The Memphis, Tenn. company also cut its forecast for the full to year to between $6.20 and $6.60 per share, from $6.90 to $7.40 previously. Shares of the company fell nearly 2 percent in early trading.
As the economy slows, FedEx is seeing a drop in demand for more expensive priority services. FedEx customers are chosing to move goods by ship or truck instead of by plane. FedEx hasn't been able to cut costs fast enough to match the decline in express demand.
Fear of a further economic slowdown is driving some of that behavior, but FedEx says steadily increasing fuel prices are also playing a big role.
read more: http://www.latimes.com/business/la-fi-fedex-earns-20120919,0,2891529.story