By SAMANTHA BOMKAMP, Associated Press
NEW YORK (AP) — FedEx Corp. said Tuesday that a combination of higher costs and slow global growth will crimp its earnings results over the next 12 months.
The world's second-largest package delivery company is closely watched for signs about the health of the economy. It reported lower results for the fiscal fourth quarter ended in May due to a charge for retiring some planes. It's getting rid of those aircraft to slim down its express network as more consumers opt for slower shipping services to save money. Operating income in that unit fell 34 percent including the one-time charge, or 3 percent without it.
FedEx earned 6 percent more per package in its U.S. unit despite a 5 percent decline in total shipments. It credited that to growth in its overnight service and higher customer charges for fuel. International priority shipment revenue rose 3 percent, while volume fell 3 percent as growth in Asia slowed.
Across the business, FedEx earned $550 million or $1.73 per share in the latest quarter, compared with $558 million, or $1.75 per share, a year earlier. Revenue rose to $11 billion from $10.55 billion a year ago.
Without the charge to retire planes, FedEx Corp. would have earned $1.99 per share, 4 cents better than Wall Street estimates.
But the Memphis, Tenn. company's forecast for the first quarter and fiscal year fell below Wall Street's expectations and its stock fell about 2 percent before the opening bell. FedEx is expecting higher costs, including salaries and pension, to restrain its earnings through next spring. The company said its forecast for the fiscal year ending in May of $6.90 to $7.40 per share doesn't include major cost reductions it plans to announce in the fall. Wall Street analysts expect earnings of $7.39 per share.
The company said its forecast is based on an assumption of 2.2 percent economic growth in the U.S. and 2.6 percent global growth for the 12 months ending in May 2013.
Samantha Bomkamp can be reached at www.twitter.com/SamWillTravel.
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