Wednesday, December 19, 2012
FedEx Sounds Message: Weak Economy, Except On The Web
FedEx‘s performance is hurting, the result of cost-conscious customers looking for cheaper shipping methods. The world’s second-largest package-delivery company sees “persistent weakness” in the global economy, CEO Fred Smith says, though a few rays of light shine through the gloom that Smith detailed today in the company’s quarterly report.
Profit at FedEx fell 11.9% from a year ago to $438 million, $1.39 a share. Excluding one-time items, FedEx made $445.5 million, $1.50 a share. Analysts had expected it to earn $445.5 million, $1.41 a share. Some of the weakness comes from Hurricane Sandy, Smith says, which disrupted transportation routes on the East Coast for weeks. Stifel Nicolaus estimates that Sandy dented earnings by 11 cents a share.
ncome picked up at two of FedEx’s businesses—by 4% in Ground (to $412 million) and 90% in Freight (to $76 million). But at the company’s largest unit, Express—also the most closely watched part of the shipper’s business—operating income fell by a third to $230 million. The decline came mostly from lower daily volume in the U.S. Abroad, volume actually increased, though demand lessened for the higher-margin services. Efforts to modernize its fleet continued: FedEx ordered four more 767 freighters. Read more >>