By Angela Chen
FedEx Corp. reported a 53% increase in earnings during the
holiday quarter, boosted by lower fuel costs, milder weather and
the shipping giant's recent restructuring moves.
FedEx shares, up 27% over the past year, slid 1.3% in premarket
trading as the company's February quarter revenue as well as its
earnings outlook for the current fiscal year fell short of
expectations.
With more than 600 aircraft and 90,000 vehicles, FedEx has
benefited from falling fuel prices. The company's restructuring of
its air-express division also has helped drive higher profits.
Those measures include modernizing its air fleet to improve fuel
efficiency and offering buyouts to about 3,600 employees, who have
since left the company.
In addition, this year's milder weather was a boon. Last year's
severe winter weather shaved off $125 million from FedEx's
operating income, executives said at the time.
For the third quarter ended Feb. 28, FedEx posted a profit of
$580 million, or $2.01 a share, up from $378 million, or $1.23 a
share, in the year-earlier period. FedEx said its stock buybacks
over the past year boosted its third-quarter per-share earnings by
11 cents.
Revenue rose 4% to $11.72 billion.
Analysts polled by Thomson Reuters recently expected per-share
earnings of $1.87 on revenue of $11.79 billion.
"We had a very successful peak season as volumes grew across all
transportation segments," Chief Executive Frederick Smith said.
For the fiscal year ending in May, FedEx narrowed its per-share
earnings range to between $8.80 and $8.95, from its previous
forecast of $8.50 to $9. Analysts, on average, were expecting
earnings of $8.97 a share, according to Thomson Reuters.
"Variable incentive compensation accruals will continue to
increase as our financial performance improves, and we expect to
deliver record fourth quarter and fiscal year earnings," said Alan
B. Graf, Jr., FedEx chief financial officer.
Write to Angela Chen at angela.chen@dowjones.com
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