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Home / Business / FedEx breaks down after the earnings forecast for 2019 has been lowered, pointing to a slowdown in world trade

FedEx breaks down after the earnings forecast for 2019 has been lowered, pointing to a slowdown in world trade



FedEx fell more than 6% on Tuesday after slashing its earnings forecast for 2019 and reporting weakness in its international business, particularly in Europe. At the same time, it announced plans to reduce costs.

The International Monetary Fund collapsed in October Global growth forecasts related to US trade tensions. It expects the global economy to grow by 3.7 percent this year, 0.2 percentage points above the previous forecast.

The US and China are in an escalating trade war in which the US puts 1

0 percent to $ 200 billion worth of Chinese goods. On December 1, the planned increase in tariffs was postponed to 25 percent to March 1, as both countries seek a negotiated settlement.

To offset the weakness of the international segment, FedEx announced plans to cut costs. The company said it will launch a voluntary buyout program, limit employee recruitment, reduce FedEx Express's international network capacity and reduce discretion.

Although FedEx said the US economy remains solid, it announced a pre-tax cash payment for a voluntary buyout of US employees, which is expected to total between $ 450 and $ 575 million. The company estimates that this will result in savings of $ 225 to $ 275 million in the 2020 budget year.

"While the US economy remains solid, our international business weakened in the quarter, particularly in Europe," said Frederick W. Smith, chairman and chief executive of FedEx Corp. Executive Officer said. "We take action to mitigate the impact of this trend through new cost-cutting initiatives."

The company, however, exceeded both expectations and earnings. FedEx reported earnings of $ 4.03 per share, while analysts expected $ 3.94. It also exceeded sales expectations at $ 17.8 billion, compared to analyst estimates of $ 17.75 billion.


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