FedEx profit misses expectations; stock down
By Nick Carey
CHICAGO (Reuters) - FedEx Corp on Wednesday posted lower-than-expected quarterly earnings as results at its FedEx Ground and FedEx Freight units missed estimates, and it reiterated an outlook analysts consider conservative, sending its stock down nearly 5 percent.
Both FedEx and main rival United Parcel Service Inc are in the final days of their peak holiday season, which has boomed over the past decade due to the rise of e-commerce. Last year both companies were hit by a last-minute surge in online orders and bad weather, leaving an estimated 2 million packages undelivered on Christmas Eve.
The two companies have worked with online retailers in hopes of avoiding a repeat of last year. So far the plans appeared to be paying off.
On a conference call with analysts, FedEx executives said labor problems at West Coast ports this year had left cargo shipments backed up over the last three months, causing inventory shortages.
Memphis, Tennessee-based FedEx reported net income of $616 million, or $2.14 per share, for the second quarter ended Nov. 30, up from $500 million, or $1.57 a share, a year earlier.
Analysts on average had expected $2.22 a share, according to Thomson Reuters I/B/E/S.
Revenue totaled $11.9 billion, below expectations of $11.99 billion, and was up in all of FedEx's major business segments.
Volumes at FedEx Ground in the United States were up 7 percent for the quarter, but revenue per package fell 2 percent due in part to lower fuel surcharges, which decline as fuel prices come down. Continued...