FedEx's Moon-based Ground unit is pulling the rest of the company out of the drink.
But even with Ground's revenue up by $270 million, or 11 percent from the third quarter of last year, there is only so much that portion of the business can do for the rest.
FedEx's third quarter revenues, reported Wednesday, were down so severely that even the Wall Street analysts who watch the Memphis, Tenn.-based company for a living didn't foresee the decline.
The company reported earnings of $1.13 per share, or 32 percent below last year's third quarter earnings of $1.65. Excluding one-time items, earnings came in a $1.23 per share.
A Thompson-Reuters poll of analysts had expected, on average, earnings per share of $1.38, with the lowest prediction at $1.30.
Net income in the third quarter was $361 million, down by 31 percent from $521 million in the same quarter last year, even as total revenues rose by 4 percent from $10.56 billion to $10.95 billion.
In other words, the company is still making money, just not as much money as last year.
On a conference call with analysts, Fred Smith, the company's chairman, president and CEO, blamed two things for the falling profits: a buyout of officers and managing directors that cost $47 million, which ultimately will save the company money, and the weakness of the international air freight markets.
The company's stock dropped as the markets opened just after the end of the earnings call, opening at $102, or $6.46 below Tuesday's close. By the end of the day, the stock closed at $99.15, a 6.87 percent decline or a loss of $7.31.
Mr. Smith said the company will respond to the continued weakness in Asia by reducing its express traffic to Asia beginning April 1. He said some shipments will be switched to lower costs alternatives.
There will be more costs associated with reducing expenses companywide. In addition to the buyouts offered to officers and directors, FedEx had an employee buyout plan. Its workers have until April 1 to take or leave the offer. Those buyouts will start to take effect May 31, the end of the company's 2013 fiscal year.
"FedEx has a long and successful history of flexing our network to meet market conditions," Mr. Smith said.
While the Express service was problematic overseas, David Bronczek, president of the Memphis-based Express unit, said its domestic business was up.
Ann Belser: email@example.com or 412-263-1699.