FedEx Warns on Lower Q1 Earnings, Cites Weak Economy

by Christopher Freeburn | September 5, 2012 10:54 am

FedEx Warns on Lower Q1 Earnings, Cites Weak Economy

Worldwide delivery company FedEx (NYSE:FDX[1]) lowered its profit outlook for its fiscal first quarter on Tuesday[2], citing continuing “weakness in the global economy.”

The shipping and logistics company said it now expects fiscal first quarter earnings to range between $1.37 and $1.43 a share. That’s down from earlier estimates of between $1.45 and $1.60 a share.

Analysts had predicted first-quarter earnings of $1.56 a share. If the company’s projection holds up, it will post its first year-over-year quarterly profit decline since 2009, Bloomberg noted.

Shares of FedEx slipped more than 1% in Wednesday morning trading.

Analysts said that the continuing economic slowdown in Europe, a lagging U.S.economy and declining growth in Asia were hitting the company’s premium shipping products. But with uncertainty lingering, even an economic turnaround might not be enough to encourage corporate customers to spend more for faster service.

The company is engaged in a new round of expense trimming, which includes payroll reductions through a voluntary buyout program[3] and the retirement of 24 older freight planes. Restructuring its premium shipping operations could save between $200 million and $900 million in costs.

In July, global shipping rival UPS (NYSE:UPS[4]) posted second-quarter earnings and revenue that missed analysts’ forecasts and lowered its profit outlook for the full year[5].

Endnotes:
  1. FDX: http://studio-5.financialcontent.com/investplace/quote?Symbol=FDX
  2. profit outlook for its fiscal first quarter on Tuesday: http://www.businessweek.com/news/2012-09-04/fedex-projects-first-earnings-drop-since-2009-as-economy-slows
  3. payroll reductions through a voluntary buyout program: http://investorplace.com/2012/08/fedex-plans-to-offer-buyouts-for-u-s-workers/
  4. UPS: http://studio-5.financialcontent.com/investplace/quote?Symbol=UPS
  5. lowered its profit outlook for the full year: http://investorplace.com/2012/07/ups-falls-short-in-q2-trims-2012-outlook/

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