(Reuters) -FedEx plans to ground 29 more aircraft in its fiscal year that started on June 1 due to "demand challenges" that continued this month, the global delivery company's chief executive said on Tuesday.
Shares in the company fell 2.7% in extended trading. FedEx also reported a lower fiscal fourth-quarter profit and said Chief Financial Officer Michael Lenz would retire effective July 31. He will remain a senior adviser to the company until Dec 31.
Last fiscal year, FedEx slashed 29,000 jobs, retired 18 planes, shuttered offices and pared back profit-sapping Sunday deliveries in a bid to cut $4 billion in permanent costs by the end of its 2025 financial year.
"This focus will support sustained profit improvement in FY24 through an environment that we expect to remain marked by demand challenges, particularly in the first half," CEO Raj Subramaniam on a conference call with analysts. The first half runs through November.
The global shipping downturn has hurt margins for the sector and FedEx's challenge is matching costs and capacity to waning demand. E-commerce has been particularly hard hit as the early pandemic's online shopping bubble burst when consumers returned to stores, resumed eating at restaurants and traveling.
FedEx on Tuesday posted adjusted profit of $4.94 per share for the fourth quarter ended May 31, compared with $6.87 per share a year earlier.
Its flagship Express service, which depends on aircraft to quickly whisk packages to recipients, reported weakness in the latest quarter on softer demand and customers trading down to slower and less-expensive transportation options - though executives said margins in that business would improve.
For fiscal 2024, FedEx forecast flat to low-single-digit-percent revenue growth versus the prior year. That would put the range of adjusted earnings, excluding items, at $16.50 to $18.50 per share.
It also said it would buy back $2 million of its common stock in the new fiscal year.
(Reporting by Priyamvada C in BengaluruEditing by Devika Syamnath, Matthew Lewis and Cynthia Osterman)
