FedEx Corp. reported third quarter earnings that missed analysts’ expectations on continued weakness in international air freight markets and customers that chose less expensive and slower shipping services.
The Memphis-based company said net income fell to $361 million, or $1.13 per share, in the three months ended Feb. 28, from $521 million, or $1.65 per share, a year earlier.
Excluding costs tied to the company’s voluntary buyout program, FedEx says it would have earned $1.23 per share, compared to $1.55 per share, during the same three-month period a year earlier. Revenue gained 4 percent to $11 billion, from $10.56 billion a year earlier.
Analysts were expecting earnings of $1.38 per share and revenue of $10.9 billion, according to FactSet.
“The third quarter was very challenging due to continued weakness in international air freight markets, pressure on yields due to industry overcapacity and customers selecting less expensive and slower-transit services,” said Frederick W. Smith, chairman, president and CEO of FedEx.
Smith also said the world’s second-biggest package delivery company will cut capacity to Asia and route less profitable shipments into “lower-cost networks.”
FedEx is in the midst of restructuring to cut annual costs $1.7 billion by 2016 with buyouts that will dramatically reduce its workforce by at least 10 percent by May 2014. The restructuring is expected to boost revenue and to compensate for consumers that have opted for cheaper and slower shipping services.
After the earnings announcement, FedEx shares dropped 3 percent in premarket trading. Previously, the shares gained 16 percent this year, data from Bloomberg News show.
The company also cut its 2013 earnings forecast. It expects adjusted earnings of between 94 cents to $1.34 per share in its fourth quarter and $6 and $6.20 per share for the year. That’s below analysts' forecasts of $2.12 and $6.35 per share, respectively. The company's fiscal year ends in May.
The Associated Press contributed to this article.