FedEx plans to cut operating costs by $2.7 billion amid lower Q1/23 profits.

Reuters reported that U.S. shipping giant FedEx Corp. said it plans to cut operating costs by $2.7 billion in fiscal 2023 after its profit fell 21.3 percent in the first quarter. /2023 (June-August) Due to the reduction in global demand for goods, the total shipment volume has been reduced. Despite the company’s revenue of $23.2 billion, an increase of 5.3% compared to the same period last year.

FedEx said the profit drop was a result of rising shipping costs rather than lower shipping numbers. As a result, the company needs to increase its cost reduction limit from $2.2 billion to $2.7 billion in fiscal 2023, where rapid cost reduction is critical. Because FedEx’s goal is to keep moving forward.

As for operating costs, FedEx said it would cut some shipping cycles on Sunday. including reducing compensation to motivate and retain employees In addition, the company will close some package sorting centers. and delay the launch of some projects

FedEx Chief Financial Officer (CFO) Michael Lenz said that reducing operating costs would increase efficiency and drive the company more profitably to support its long-term financial goals. The company’s outlook is weak. The factor is macroeconomic weakness in Asia. Service challenges in Europe and lower revenue from US shipping.

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