FedEx second-quarter profit misses estimate; offers holiday optimism
By Nivedita Bhattacharjee
(Reuters) - FedEx Corp (FDX.N: Quote) posted a 14 percent rise in quarterly profit on Wednesday on stronger margins and cost cuts, but results missed Wall Street estimates, which overshadowed the company's confident forecast for the holiday shopping season.
Wall Street analysts expressed disappointment at the slight dip in revenue at the express delivery business, FedEx's biggest unit. They also noted softening volume growth for ground deliveries.
Average daily volume at FedEx Ground rose 8 percent in the fiscal second quarter, slowing from the 11 and 10 percent growth in the previous two quarters, and below the 10 percent expected by Logan Purk, an analyst at Edward Jones.
A 3 percent rise in overall revenue to $11.4 billion and success in ongoing cost cutting efforts helped offset some of the volume weakness.
FedEx earned $500 million, or $1.57 a share, in the second quarter ended November 30, versus $438 million, or $1.39, in the same quarter last year.
Analysts, on average, expected earnings of $1.64 as per Thomson Reuters I/B/E/S.
Shares of the global shipping company slid as much as 3 percent in premarket action. By mid-morning, the stock dipped 0.1 percent at $138.93 on the New York Stock Exchange.