FedEx profit up, but results short of expectations


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In a glimpse into how the severe winter weather may have affected Wall Street, FedEx Corp. reported Wednesday that profit in the Memphis, Tenn., shipping company's third fiscal quarter rose slightly to $378 million, or $1.23 per share, up 5 percent from $361 million, or $1.13 per share, a year ago.

The results fell short of the $1.45 per share expected by Wall Street analysts, according to Thomson Reuters.

"Historically severe winter weather has been a factor in all of our lives these past several months, and it has significantly affected our third-quarter earnings," FedEx CEO Frederick Smith said in a conference call after the results were announced. "In fact, it's been the toughest winter in which FedEx has ever operated.

"Let's hope for spring."

Revenue increased 3 percent to $11.3 billion in the three months ended Feb. 28, up from $11 billion last year.

The FedEx Ground unit, based in Moon, posted a 10 percent revenue increase year-over-year, to $3.03 billion. FedEx Ground's operating income was up 2 percent, to $477 million. Its operating margin was 15.7 percent, down from 17 percent a year ago.

FedEx Ground's average daily volume was up 8 percent and the division saw a 1 percent rise in revenue per package, according to the earnings release.

The third quarter got a boost from Cyber Week shopping, but much of that was offset by a $40 million year-over-year weather impact on operating income.

The company's strategy of keeping its different segments separate has proven to be an advantage for customers, Mr. Smith said, and its $1.6 billion improvement program for FedEx Express remains on track. FedEx Ground ships small packages in the U.S. and Canada; FedEx Express includes rapid shipment options via air.

Mr. Smith added that social media outlets may have overemphasized an increase in holiday deliveries that coincided with numerous winter storms. "We live in a world where Twitter and social media make anecdotes," he said. "That was the big difference."

The company said it expects earnings for the fiscal year that ends in May to be between $6.55 and $6.80 per share, below analysts' forecasts of $6.89.

Kim Lyons: klyons@post-gazette.com or 412-263-1241. Twitter: @SocialKimly


First Published March 19, 2014 7:59 AM

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