FedEx cuts 2013 profit target; shares fall 2pc
NEW YORK, Sept 18 – FedEx Corp lowered its fiscal 2013 profit target today, saying earnings could slide as much as 6 per cent for the year, as a weakening world economy prompts customers to shift toward lower-priced and slower shipping options.
The world’s second-largest package delivery company said it now expects profit for its fiscal year, which ends in May, to come to US$6.20 to US$6.60 per share, below its prior forecast of US$6.90 to US$7.40 a share.
Wall Street had expected a full-year profit of US$7.03 per share.
FedEx’s shares fell 2 per cent to US$87.35 in premarket trading from yesterday’s close of US$89.28 on the New York Stock Exchange.
“Weak global economic conditions dampened revenue growth (and) drove a shift by our customers to our deferred services,” Chief Financial Officer Alan Graf said in a statement.
Earlier this month, FedEx had warned the slowing economy was hurting its results, following larger rival United Parcel Service Inc, which in July cut its 2012 profit forecast.
Net income for its fiscal first quarter that ended Aug. 31, was US$459 million (RM1.41 billion), or US$1.45 per share, down 1 per cent from US$464 million, or US$1.46 per share, a year earlier.
That figure is well below the US$1.56 analysts on average had looked for prior to the company’s profit warning early this month, but above Wall Street’s revised earnings target of US$1.40 per share, according to Thomson Reuters I/B/E/S.
Total revenue rose 3 per cent to US$10.79 billion.
Profit was heavily weighted by the company’s express segment, which handles overnight package delivery by aircraft, where operating earnings fell 28 per cent. The segment reported a 5 per cent drop in US package deliveries.
Memphis, Tennessee-based FedEx said it will raise its average shipping rates 3.9 per cent in the United States starting Jan. 7. – Reuters