After carving a fifth off the market value of FedEx Corp. last week when it withdrew its annual forecast and announced preliminary results that fell well short of expectations, investors were in a more forgiving mood on Thursday for the full quarterly report. They mildly welcomed FedEx’s effort to chop as much as $2.7 billion of costs over the next 12 months to offset sagging package volume, especially at the Express unit. The shares rose 0.8% on a day when the S&P 500 Index fell 0.8%.
No doubt, the cuts are needed. Package volume at the Express unit fell about 11% in the fiscal first quarter from a year earlier because of disruptions in China from severe Covid lockdowns and in Europe because of Russia’s war in Ukraine. Operating profit at Express fell to a paltry $174 million from $567 million a year earlier.