(Finance) – The profit warning from FedExone of the largest transport and freight forwarding companies in the world, has shocked Wall Street, with the stock responding to the corporate announcement by posting its largest daily decline since the 1980s. The company communicated drastic cost reduction measures (including location closures around the world, the use of smaller cargo planes and the freezing of hiring) and withdrawal of earnings forecasts for fiscal year 2023, due to a worsening macroeconomic environment.
“FedEx has announced the weaker set of results that we have seen, compared to expectations, in our nearly 20 years of company analysis“, analysts went so far as to write Deutsche Bank. FedEx expects first-quarter earnings, excluding certain items, to be $ 3.44 per share, or about 33% below the analyst’s average estimate of $ 5.10.
Experts are beginning to fear that downward revisions to outlooks will become more and more frequent in the coming monthswith companies that will find themselves operating in a context characterized by rising costs and increasingly weaker consumer demand.
“More and more companies are warning about their profits, lowering expectations for the remainder of 2022 and for next year; only this week we had High-impact profit warnings from major companies such as Dow Chemical, Eastman Chemical, Kion and Fedex – explained Giuliano Gasparet, Head of Equity of Generali Insurance Asset Management – The only sector that instead shows a positive revision of profits is the banking sector, since the recent rate movement is extremely positive for the profits of European banks, segment which currently registers rather low valuations “.
Among the announcements that have caused the most discussion is that of the Swedish Electroluxwhich on Monday announced plans to cut costs and warned its profits would decline since high inflation and low consumer confidence squeezed demand for home appliances. “The group’s third quarter earnings are expected to decline significantly compared to the second quarter of 2022, also excluding the one-off cost to exit the Russian market,” he said in a statement. “The program, which starts immediately, will focus on reducing variable costs, with a particular focus on eliminating cost inefficiencies in our supply and production chain,” he added.
Another emblematic case of the last few days is that of the British conglomerate Associated British Foodswith its Primark fashion brand located struggling with worsening costs and with increasingly cautious customers facing an income squeeze. “This could act as a reality check for the sector – commented the analysts of JPMorgan – Recalling that although the magnitude of the consumer demand shock may not be as severe as previously predicted, given government support, there are headwinds to the material margins that retailers face in the next year “.