By Chelsey Dulaney
FedEx Corp. reported revenue and adjusted profit that came in
shy of Wall Street expectations for its May quarter, as the
shipping giant was stung by currency and fuel impacts and revenue
fell in its biggest segment.
Shares of FedEx, up 5% this year, fell 1.1% in premarket
trading.
In March, the company had warned that the strong dollar and
higher fuel costs could hamper results for the quarter. The warning
came after the company's recent results had been boosted by lower
fuel costs and restructuring at its largest segment, air express,
where it has bought out thousands of employees and modernized its
air fleet.
For the fourth quarter ended May 31, FedEx posted a loss of $895
million, or $3.16 a share, compared with a profit of $780 million,
or $2.62 a share, in the year-earlier period.
The bottom line in the latest quarter was dragged down by heavy
special charges. FedEx said last week that it would book a $2.2
billion pretax charge in the quarter as a result of its decision to
switch to a pension accounting method that it said makes it easier
to gauge plan performance.
FedEx also booked a charge of 47 cents a share related to a $228
million settlement in a long-running independent contractor
lawsuit. FedEx has tussled for years over its practice of
classifying its U.S. delivery drivers as independent
contractors.
Excluding special charges, earnings were $2.66 a share, up from
$2.54 a share a year earlier but below the consensus estimate of
analysts polled by Thomson Reuters, who expected $2.68.
Revenue edged up 2.5% to 12.1 billion, below Wall Street's
expectations of $12.3 billion.
For its newly-started fiscal year, FedEx projected per-share
earnings of $10.60 to $11.10, while analysts had forecast $10.88 a
share.
At the company's biggest segment--express--revenue fell 4.3% to
$6.7 billion. A 2% increase in U.S. domestic package volume was
more than offset by lower fuel surcharges and unfavorable currency
exchange rates.
Revenue in the ground segment jumped 19% to $3.57 billion,
helped by its acquisition of logistics provider GENCO Distribution
System Inc. and a 5% increase in average daily volume.
FedEx said its freight segment's revenue edged up 1.3% to $1.57
billion, as shipments for the less-than-truckload operation
improved 2%. Lower fuel surcharges also weighed on the segment.
FedEx also said it has raised the mandatory retirement age for
its board from 72 to 75, effective immediately. FedEx's chief
executive and chairman, Frederick W. Smith, was 70 years old as of
the company's August proxy filing. Another board member, James
Barksdale, was 71 years old as of that filing.
"This change is consistent with the market trend of increasing
the mandatory retirement age for board members," said David P.
Steiner, the company's lead independent director.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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