VOL. 128 | NO. 54 | Tuesday, March 19, 2013
FedEx Earnings Could Indicate Shipping Trends
NEW YORK (AP) – FedEx Corp. wants businesses and consumers to buy more express-delivery shipping services, and the company could indicate whether that’s happening yet when it reports fiscal third-quarter results before the market opens Wednesday.
Like freight railroads, package-delivery firms like FedEx are often seen as economic bellwethers. They do better when businesses are shipping lots of goods and feeling confident enough to use pricier services.
FedEx is coming off a quarter in which growth in Freight and Ground operations helped offset weakness in its core express-delivery business. Businesses and consumers have been switching from express delivery to cheaper but slower ground shipping, which has hurt FedEx and rival United Parcel Service Inc.
CEO Fred Smith said recently that FedEx’s chief economist predicts the U.S. economy will grow about 2 percent this year and 2.3 percent next year, with the global economy picking up slightly faster. That might be enough to boost demand for express deliveries.
Smith has said that uncertainty about U.S. fiscal policy and corporate taxes is causing companies to adopt their “default position” of caution instead of spending more money on investment.
Whatever the cause, FedEx itself plans to cut annual costs $1.7 billion by 2016 with buyouts reducing its workforce by at least 10 percent by May 2014. The company announced last month that it would take pretax charges of $550 million to $650 million over two quarters to cover the buyouts.
Analysts expect that the Memphis-based company will earn $1.40 per share, excluding special items, on revenue of $10.84 billion, according to a survey by FactSet.
FedEx earned $521 million, or $1.65 per share, on revenue of $10.56 billion in the same quarter last year. Excluding one-time items, adjusted earnings were $1.55 per share.
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