FedEx shares tumbled more than 9% in after-hours trading Tuesday after the package delivery giant lowered its revenue forecast as weaker demand hit sales.

The company said it expects a low-single-digit decline in revenue for the fiscal year, down from a previous forecast for flat sales year over year. Analysts had expected a revenue drop of less than 1% in the current fiscal year, according to LSEG, formerly known as Refinitiv.

It’s the second consecutive quarter FedEx has lowered its sales outlook.

The company’s Express unit, its largest, was especially challenged in the quarter with lower demand, surcharges and customers shifting to cheaper services, FedEx said.

“In the remainder of [fiscal] 2024, we expect revenue will continue to be pressured by volatile macroeconomic conditions, negatively affecting customer demand for our services across our transportation companies,” FedEx said in a filing. Its fiscal year ends May 31.

The company said, however, that operating income would improve thanks to its cost-cutting plan.

Here’s how FedEx performed versus Wall Street’s expectations:

• Adjusted earnings per share: $3.99 vs. $4.18, according to analysts surveyed by LSEG
• Automotive revenue: $22.17 billion vs. $22.41 billion expected

For the three-month period ending Nov. 30, FedEx reported net income of $900 million, or $3.55 a share, versus $788 million, or $3.07 a share, a year earlier. Adjusting for certain items, the company posted earnings of $1.01 billion or $3.99 per share, up more than 25% from a year earlier but below analyst forecasts.

The company credited cost-cutting initiatives for its higher profit. Revenue fell 3% to $22.17 billion from a year earlier.

“FedEx has delivered an unprecedented two consecutive quarters of operating income growth and margin expansion even with lower revenue, clear evidence of the progress we are making on our transformation as we navigate an uncertain demand environment,” FedEx CEO Raj Subramaniam said in a news release.