FedEx Corp. (FDX) - Get Report fell 8.7% to $168.96 on Wednesday after the shipping giant's fiscal second-quarter earnings beat expectations but the company lowered its outlook and said its international business "weakened" during the quarter.
FedEx earned an adjusted $4.03 a share in the quarter, higher than Wall Street estimates of $3.94. Revenue of $17.8 billion met forecasts.
"While the U.S. economy remains solid, our international business weakened during the quarter, especially in Europe. We are taking action to mitigate the impact of this trend through new cost-reduction initiatives," CEO Frederick W. Smith said in a statement.
To cut costs, the Memphis-based FedEx said it would be instituting buyouts, with costs of $450 million to $575 million expected in the fourth quarter of fiscal 2019. The company said that "similar programs are being considered for employees in international regions." FedEx said it also would be reducing its international network capacity at FedEx Express.
FedEx said it was implementing a voluntary buyout program for eligible employees; international network capacity reductions at FedEx Express; and limited hiring in staff functions; and reducing discretionary spending. The company said it will continue its efforts to improve, including expanded use of technology.
FedEx said it expects adjusted earnings in fiscal 2019 of between $12.65 to $13.40 a share before certain year-end retirement plan accounting adjustments, down from a previous forecast of $15.85 to $16.45 a share.