December 8, 2023

FedEx Profit Drops 12%, Not as Much as Expected

Demand for air express shipments has fallen as customers turn to slower, less costly methods of delivering goods. Those declines were partly offset by strong growth at the company’s unit that ships goods by truck.

FedEx reported fiscal second-quarter earnings of $438 million, or $1.39 a share, on Wednesday, compared with $497 million, or $1.57 a share, a year earlier.

Disruptions relating to Hurricane Sandy, which walloped the East Coast late in October and killed more than 130 people, reduced earnings by about 11 cents a share.

Factoring out those charges, profit was $1.50 a share, more than the $1.41 analysts had forecast, according to Thomson Reuters.

FedEx shares closed at $93.20, up almost 1 percent.

As part of its plan to revamp the company, which was announced in October, FedEx plans to reduce its staff. It has extended a buyout offer that it expects thousands of workers in the United States to accept.

The company is aiming to trim costs, particularly at the air express unit, where profit slumped about 33 percent.

The company’s ground business is taking market share from its larger rival, United Parcel Service, a FedEx executive said.

“There is no question that with our value proposition that we are taking some level of share,” said David F. Rebholz, who heads the company’s ground operation, which generates about a quarter of FedEx’s sales. “We’re absolutely winning the game over the long run.”

Revenue rose 4.7 percent to $11.1 billion from $10.6 billion a year earlier.

The company held steady its profit forecast for 2013, saying it expects to earn $6.20 a share to $6.60 a share for the fiscal year through May. In September, FedEx cut that forecast by about 10 percent.

That forecast does not account for the costs of buying out thousands of workers, which could total $550 million to $650 million, the company said.

At the end of its last fiscal year, FedEx employed about 300,000 people worldwide, according to a filing with the Securities and Exchange Commission.

FedEx said shipments relating to the holiday shopping season were on track to set a record.

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