FedEx reports drop in profits
December 20, 2012- On Wednesday, FedEx Corporation (NYSE: FDX) announced that profit at the company dropped by 12% during the second quarter, but the drop was less that had been feared by investors, as the company struggled to get better results in its airfreight business.
Air express shipment demand has dropped as more customers are turning to slower methods that are less costly delivering their goods. The declines in those shipments were offset partially by a strong increase at the corporation’s unit that uses trucks to deliver goods.
FedEx’s second quarter fiscal earnings were $438 million or $1.39 per share, compared to last year’s $497 million or a per share rate of $1.57. Hurricane Sandy created huge disruptions and that helped to reduced the company’ earnings by approximately 11 cents per share.
If you factor out those types of charges, the profit was $1.50 per share, which was $0.09 more than what Wall Street analysts forecasted. After the announcement was made, shares of FedEx closed at $93.21, an increase of about 1%.
In October, the company announced plans to revamp the company and as part of that, FedEx is planning to cut staff. It extended the period for a buyout offer and is expecting that thousands of its workers across the U.S. will accept the package.
The company wants to cut costs, particularly in its air express unit, where profits fell by nearly 33%. However, its ground business has been able to take away market share from United Parcel Post, its biggest rival, said an executive at FedEx.
Revenue for the quarter was $11.1 billion a 4.7% increase over last year’s $10.6 billion during the same period. FedEx did not change its forecast for profit for 2013, as it announced it expected to earn between $6.20 and $6.60 per share for its fiscal year that ends at the end of May. In September, the company lowered its forecast by nearly 10%.