FedEx profit beats forecasts as margins rise; shares jump
By Nick Carey
CHICAGO (Reuters) - Package delivery company FedEx Corp (FDX.N: Quote) on Wednesday reported a better-than-expected quarterly net profit, saying higher margins, cost-cutting and a lower effective tax rate offset weak industrial production and global trade.
The news sent FedEx stock up 5 percent in after-market trading.
Often seen as a bellwether of U.S. economic activity, Memphis, Tennessee-based FedEx reiterated its fiscal 2016 earnings forecast between $10.40 and $10.90 per share.
The company reported adjusted net income for its fiscal second quarter ended Nov. 30 of $729 million, or $2.58 per share, up 17 percent from $622 million, or $2.16 per share, a year earlier.
Analysts had on average expected earnings for the fiscal second quarter of $2.51 a share.
FedEx said its adjusted earnings per share reflected one-off expenses of 9 cents a share related to settling litigation over its use of independent contractors as drivers at FedEx Ground and 4 cents related to its pending acquisition of Dutch package deliver company TNT Express NV TNTE.AS.
During a conference call with analysts, executives said the company expects to receive "final, unconditional approval" from the European Union for its takeover bid for TNT in the second half of January. FedEx expects to complete the acquisition of the Dutch carrier in the first half of 2016.
FedEx "posted solid earnings despite continued weakness in industrial production and global trade, and we are making impressive progress toward our goals to increase margins, earnings per share, cash flows, and returns on invested capital," Chief Executive Frederick Smith said in a statement. Continued...