FedEx lowers earnings forecast for fourth quarter

Source: Supply Chain Digital

Date :5/14/2008 4:18:52 AM

FedEx Corp. has slashed its quarterly earnings blaming surging fuel prices and a drop in demand US domestic express package and LTL freight services caused by the weak economy.

The package delivery company expects earnings for the company's fourth quarter ending May 31, 2008, to be in the range of $1.45 to $1.50 per diluted share, compared to the previous forecast of $1.60 to $1.80.

“Restrained demand”

Alan Graf, executive vice president and chief financial officer, attributed the reduced figures to a combination of rising fuel prices and the weak US economy.

"Since we provided earnings guidance for the fourth quarter in March when the crude oil price was slightly above $100 per barrel, our estimated fuel costs for the quarter have increased more than seven percent, or $100 million from our previous estimate, and the weak economy has restrained demand for US domestic express package and LTL freight services," he stated.

"While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices. This revised outlook assumes no additional increases to the current fuel price environment and no further weakening of the economy."

May 14, 2008