DOW JONES NEWSWIRES
FedEx Corp.'s (FDX) fiscal first-quarter earnings slumped 53% as
smaller shipments and lower fuel surcharges hurt revenue, but U.S.
volume rose slightly.
The package-delivery company last week sharply raised its profit
target for the quarter and expressed optimism for the current
period amid anticipation of "a continued modest recovery in the
global economy."
A number of top U.S. land-based transporters also have reported
signs of improving volume in recent weeks, though levels remain
sharply lower than 2008.
FedEx, an economic bellwether, has cut jobs and reduced capacity
at its express and freight segments to reflect reduced demand. But
it recently expanded some international economy shipping services,
partly to capture sales from companies aiming to reduce costs.
Chief Financial Officer Alan B. Graf Jr. said Thursday that
"While we see signs of improvement in the economy, the
year-over-year comparisons will remain very difficult for our
second quarter" and the company will stay focused on cost
controls.
The company said it will increase shipping rates by an average
5.9% for U.S. domestic and export services starting Jan. 4., but
the increase will partly be offset by lower fuel surcharges.
For the period ended Aug. 31, FedEx reported a profit of $181
million, or 58 cents a share, down from $384 million, or $1.23 a
share, a year earlier. Last week's raised profit estimate was 58
cents a share, reflecting better-than-expected
international-priority shipping services results.
Revenue decreased 20% to $8.01 billion. Analysts polled by
Thomson Reuters most recently expected $8.24 billion.
Operating margin fell to 3.9% from 6.3%.
At its FedEx Express business, revenue fell 23% and earnings
were off 70%. U.S. domestic package revenue dropped 22%, as revenue
per package declined amid lower fuel surcharge revenue, though
package volume grew slightly. The results were partly offset by
gains from DHL's exit from the U.S. domestic package market and
lower expenses due to cost cutting and fewer flight hours.
Shares were down 0.9% premarket at $77.40.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com
