FedEx Lowers its Outlook for the Coming Year

One of the world’s largest logistics and package delivery company, FedEx Corporation (NYSE:FDX) was forced to pare its outlook for the coming year on account of the sluggish growth of global economy combined with ever increasing  fuel prices.

The businesses are more focused on controlling costs along with increase the rate of return in order to boost profits, forcing them to maintain a lean inventory to stick in accordance to the customer sentiments. In a statement, the Chief Executive Officer of FedEx Corporation, Fred Smith said that the company expects a sluggish growth in the coming days mainly due to the lack of confidence that the policy makers in the United States and Europe will address the current economic challenges effectively.  In addition to that it has been speculated that the economy has, if not will soon slip into recession even though that is not what FedEx considers that a the global economy will go into recession yet again.

Due to the slowdown in the rate of growth of the global economy, it has put the customers in a sour mood making them reluctant to open up their wallets which have turned out to be huge disadvantage to FedEx and many other corporations.  The current situation has to change if companies like FedEx have to benefit from the economic expansion, said FedEx executives earlier today. The forecast led to FedEx shares hitting a two year low by going down by 11 percent.

FedEx’s move to lower its earning guidance did not come to be a surprise as it was expected due to the tepid domestic economy and slow international trade. The FedEx stock is cheap right now, if this is just a slowdown of the economy, then it could be bought, but if it happens to be a sign of recession setting in then buying it is a strict no says few people who are in business.

The Strong ground and freight result of FedEx has helped it to offset the impact of slow economy which has brought sheer reduction in volumes. The company has announced increase in rates. There has been a considerable reduction of daily package volume by 3 percent in FedEx Express, the company’s largest division responsible for more than 60 percent of the company’s revenue. The domestic revenue per package in FedEx Express has increased by 13 percent on higher fuel surcharges, increased weight per package and yield management, said FedEx Corporation.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.