ATW Daily News

FedEx reports falling first-quarter profit

Friday September 18, 2009

FedEx Corp. reported a $181 million net profit in its fiscal first quarter ended Aug. 31, down 53% from the $384 million earned in the year-ago period, as operating income at its FedEx Express segment plunged 70% to $104 million.

Chairman, President and CEO Frederick Smith said that "better-than-expected FedEx International Priority volume" and "decisive management actions" boosted the result "above our initial expectations." Company revenue fell 20% to $8.01 billion, expenses were down 18% to $7.69 billion and operating income declined 50% to $315 million from the $630 million reported in the year-ago quarter.

The airline segment suffered a 23% drop in second-quarter revenue to $4.92 billion and the aforementioned 70% decline in EBIT from the $345 million reported last year. US domestic package revenue was down 22% despite a slight increase in volume. International Priority revenue also fell 22% on a 20% drop in revenue per package and a 4% slip in volume.

"Results were negatively impacted by continued global economic weakness and substantially lower fuel surcharges, partially offset by gains from DHL's exit from the US domestic package market," FedEx said, adding that it cut expenses thanks to lower fuel prices and consumptions, reduced flight and labor hr. and "other aggressive actions."

It expects fiscal second-quarter earnings per share of $0.65-$0.95, down from $1.58 in the period ended Nov. 30, 2008. Effective Jan. 4, 2010, it will increase shipping rates by an average of 5.9% for US domestic and export services. It said the increase will be offset partially by adjusting the fuel price at which it adds a surcharge, reducing it by 2 percentage points.

by Brian Straus

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