harsh weather

FedEx Credits Its Cost Controls as Profit Rises 33%, Exceeding Forecasts

The company said it would spend more on technology and fuel-efficient aircraft, helping to increase revenue per package.

“Our actions to improve yields continue to drive revenue and earnings growth across our transportation segments,” FedEx’s chief financial officer, Alan B. Graf Jr., said.

“Even with higher planned capital spending in fiscal 2012, margins, cash flows and returns are expected to improve year over year.”

FedEx, which ranks No. 2 behind United Parcel Service among package shipping companies, has been able to pass through higher costs via fuel surcharges and still has room to raise prices without widespread retaliation from consumers, many analysts said.

“Pricing and expense control” drove FedEx earnings up even as it navigated harsh weather, an economic soft patch and supply chain disruptions caused by Japan’s earthquake, and lofty fuel costs, said Peter Nesvold, a Jefferies Company analyst.

FedEx’s chief executive, Frederick W. Smith, said the combination of rising fuel prices, the devastation in Japan and consumer sentiment contributed to the slowing of the economic recovery. However, he said he expected a turnaround now that crude oil prices were retreating.

FedEx predicted that consumer spending, industrial production and gross domestic product would improve in the second half of 2011. FedEx said its profit rose 33 percent, to $558 million, or $1.75 a share, from $419 million, or $1.33 a share, a year earlier.

Analysts, on average, forecast a profit of $1.72 a share.

FedEx forecast its fiscal 2012 profit rising to $6.35 to $6.85 a share, allowing for oil’s volatility, Mr. Graf said. The midpoint of $6.60 topped analyst forecasts.

Revenue in the period, which ended May 31 and was the fourth quarter of FedEx’s fiscal year, rose 12 percent, to $10.55 billion from $9.43 billion.

FedEx Express and the less expensive ground segments, which account for more than 80 percent of the company’s revenue, had revenue growth of more than 10 percent in the quarter.

Fast-growing e-commerce drove up FedEx’s SmartPost average daily volume 24 percent as revenue per package rose 8 percent. SmartPost involves shipping packages to the United States Postal Service, which in turn delivers to residences.

FedEx’s freight division posted a long-awaited return to profitability after two company segments were combined.

Stock in FedEx, which is based in Memphis, rose $2.31, or 2.6 percent, to $91.44 a share.

Article source: http://feeds.nytimes.com/click.phdo?i=39109eebfd60c250ba4257123b522b30

Sales of New Single-Family Homes Rose in April

The Commerce Department said sales increased 7.3 percent to a seasonally adjusted annual rate of 323,000 units, the highest level since December, while prices also rose. Economists had expected a 300,000-unit rate.

All four regions recorded gains in sales, with the West reporting a 15.1 percent rise. Compared with April last year, however, sales were down 23.1 percent.

“Although the headline figure has moved sharply on a month-to-month basis, reflecting in part the impact of harsh weather in earlier months, the bottom line is that the new-home market continues to bounce along the bottom,” said Omair Sharif, an economist at RBS in Stamford, Conn.

An oversupply of used houses and a relentless wave of foreclosed properties are curbing the market for new homes, even as builders are keeping lean inventories.

A record low 175,000 new homes were available for sale last month, down 2.8 percent from the previous month.

Data last week showed a steep drop in new home construction in April and a decline in sales of previously owned homes.

“There’s still a tremendous overhang in the housing market, and while new-home sales are starting to percolate, that doesn’t change the fact that we still have such huge inventory,” said Michael Yoshikami, chief investment strategist at Ycmnet Advisors in Walnut Creek, Calif.

While the report cast a positive light on the housing market, it did little to change perceptions that the economy remained mired in a soft patch.

That view was reinforced by a Richmond Federal Reserve survey showing that manufacturing activity in the central Atlantic region stalled in May, after expanding during the previous seven months.

The Richmond Fed’s manufacturing index came in at minus 6, a contraction from the reading of plus 10 in April, dragged down by declines in shipments and new orders. A negative number indicates contraction.

The Commerce Department report also showed that the median sales price for a new home rose 1.6 percent last month to $217,900. Compared with April last year, the median price increased 4.6 percent.

At April’s sales pace, the supply of new homes on the market dropped to 6.5 months’ worth, the lowest since April last year, from 7.2 months’ worth in March.

Article source: http://feeds.nytimes.com/click.phdo?i=53190af79245ed34b3fa4596c3082d94

FedEx Credits Its Cost Controls as Profit Rises 33%, Exceeding Forecasts

Sales of New Single-Family Homes Rose in April

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