FedEx falls but meets Wall Street's expectations

Source: Supply Chain Digital

Date :9/18/2008 11:39:54 PM

FedEx Corp said that first quarter earnings fell 22 percent but met forecasts as cost cuts partially offset the impact of slowing global growth.

In the three months to August 31, the package delivery company earned US$384 million, or US$1.23 per share, compared with US$494 million, or US$1.58 per share, a year earlier.

Revenue rose eight percent to US$9.97 billion from US$9.20 billion a year ago.

A Thomson Reuters poll showed analysts, on average, were expecting profit of US$1.23 per share on revenue of US$9.92 billion.

Cutbacks

FedEx also predicted it will beat analysts' current expectations for the second quarter, and said it will hike shipping rates at its Express unit starting early next year.

"As FedEx faces today's especially tough economic challenges, we'll continue to hold the line on costs across all segments," Chairman and Chief Executive Fred Smith said. "This includes lowering variable incentive compensation, controlling discretionary spending and limiting staff."

Among the cutbacks, FedEx said it managed flight hours and reduced fuel consumption by about five percent in its Express unit during the quarter.

FedEx has also "significantly curtailed" its bonus programs and is not adding staff "unless it's an operational or sales necessity," added Chief Financial Officer Alan Graf.