FedEx Corp. delivered a disappointing earnings report Tuesday and said it plans to offer buyouts to some of its workers and reduce spending to make up for weak international shipping, especially in Europe.
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The Memphis, Tennessee-based company said it had a fiscal second-quarter profit of $935 million, or $3.51 per share. That's up $775 million, or $2.84 per share, a year ago.
But the 11 analysts surveyed by Zacks Investment Research were expecting earnings of $4.05 per share. FedEx said that if one-time costs are excluded, its quarterly profit per share would have been $4.03.
"While the U.S. economy remains solid, our international business weakened during the quarter, especially in Europe," said FedEx chairman and CEO Fred Smith. "We are taking action to mitigate the impact of this trend through new cost-reduction initiatives."
The package delivery company said it expects to record a charge related to buyouts for its U.S. employees between $450 million and $575 million in its fiscal fourth quarter. FedEx says the buyouts should save it between $225 million and $275 million annually. The company employs about 450,000 people worldwide.
Edward Jones analyst Dan Sherman said it looks like FedEx expected the economy to remain stronger in Europe than it has. Sherman said many investors had been expecting bad news from FedEx since the company reshuffled its executive team earlier this month and named a new head of its FedEx Express unit.
FedEx expects to deliver a record number of packages again this year during the peak holiday season as online shopping continues to grow.
The company reported revenue of $17.82 billion in its second quarter that ended Nov. 30, exceeding Wall Street forecasts. Nine analysts surveyed by Zacks expected $17.71 billion.
FedEx expects full-year earnings in the range of $15.50 to $16.60 per share. Analysts had been expecting $16.31 a share, according to FactSet.
FedEx's stock was down $11.21, or 6.1 percent, at $173.80 in after-hours trading following the release of the earnings report.
Elements of this story were generated by Automated Insights using data from Zacks Investment Research. Access a Zacks stock report on FDX at https://www.zacks.com/ap/FDX