Fedex Earnings: The Economy SUCKS
Fedex Corp. (NYSE:FDX) announced fourth quarter earnings that came in below last year and declared lower-than-expected estimates of profit in the first quarter, based on slowing U.S. economic activity.
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Net earnings for the fourth quarter were $550 million ($1.73 a share) compared to $558 million ($1.75 a share) in the last year. Revenues, however, were higher at $11 billion from $10.6 billion last year.
Performance during the quarter was affected by weak volumes on routes from Asia to North America and Europe, while daily package volume fell 4.9 percent within the U.S.
The company estimated earnings of $1.45 to $1.60 a share in the first quarter, which compares unfavorably with a $1.70 estimate from 16 analysts polled by Bloomberg. The company’s estimate derives from its view that U.S. economic growth for the fiscal year to May 31 would likely be only 2.2 percent against 2.3 percent estimated last December. Last week, economists at Morgan Stanley in New York lowered U.S. GDP forecasts for 2012 and 2013 as the European debt crisis worsened, saying the U.S. will expand only 2 percent this year. This estimate is down from a previous estimate of 2.3 percent, and 1.7 percent next year rather than 2 percent.
Fedex estimates profit for the fiscal year ending May 2013 to be $6.90 to $7.40 a share, while analysts expected $7.38 a share.