FedEx to cut costs as its global outlook dims
Credit: Reuters
* Q4 EPS ex-items $1.99 vs $1.92 Wall St view
* Revenue up 4 pct to $11 bln
* Sees FY 2013 $6.90-$7.40 per share
* Shares down 1.7 percent
(Adds analyst comment)
By Lynn Adler
June 19 (Reuters) - FedEx Corp (FDX.N) reported above-forecast adjusted quarterly profit and forecast higher fiscal 2013 results, as it said it expected to take new cost-cutting measures to offset shipments weakened by soft global economies.
The world’s second-largest package delivery company said on Tuesday that net profit for its fiscal fourth quarter ended May 31 was $550 million, or $1.73 per share, down from $558 million, or $1.75 per share, a year earlier.
But adjusted profit before items was $1.99 per share, up from $1.75 a year before and above the $1.92 average forecast, according to Thomson Reuters I/B/E/S.
Revenue rose 4 percent to $11.0 billion, near the $11.1 billion Wall Street estimate.
FedEx said it faces cost increases in fiscal 2013, including higher pension expenses and depreciation costs.
FedEx said it sees profit per share of $1.45 to $1.60 in the first quarter and $6.90 to $7.40 in fiscal 2013. The outlook "does not include the impacts of the significant cost reductions programs currently under review that should be announced in the fall," the company said in a statement.
The guidance was "slightly disappointing," but is likely to be revised higher at the company's October investor meeting, after cost-cutting measures such as retiring the "gas-guzzling" aircraft take hold, said Kevin Sterling , BB&T Capital Markets analyst in Richmond, Virginia.
FedEx in March cut its outlook based on expectations for below-trend global growth and a mild Eurozone recession.
In its largest segment, FedEx Express, U.S. domestic revenue per package rose 6 percent in the fourth quarter due to higher rates per pound, fuel surcharges and growth of premium services, even as volume declined 5 percent.
International priority revenue per package rose 3 percent while average daily volume declined 3 percent driven by year-over-year declines from Asia.
Memphis, Tennessee-based FedEx is undergoing a fleet upgrade to improve fuel efficiency, announcing in December that it was buying new aircraft from Boeing Co (BA.N) to replace some aging planes and delaying delivery of others to cut expenses. [ID:nN1E7BE01D] [ID:nN1E7BE03B]
On June 4, FedEx said it was accelerating its aircraft retirement schedule, and taking a related net charge of $84 million, or 26 cents per share, in the fourth quarter. [ID:nL3E8H4816].
The company's shares were down 1.7 percent in premarket trading at $86.90.
(Reporting By Lynn Adler; Editing by Gerald E. McCormick and Sofina Mirza-Reid)
((lynn.adler@thomsonreuters.com)(1-646-223-6307)(Reuters Messaging: lynn.adler.reuters.com@reuters.com)) Keywords: FEDEX/
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