FEDEX yesterday 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 five per cent.
On a conference call with analysts, FedEx executives said labour problems at West Coast ports this year had left cargo shipments backed up over the last three months, causing inventory shortages.
Memphis-based FedEx reported net income of $616m (£396m), or $2.14 per share, for the second quarter ended 30 November, up from $500m, or $1.57 a share, a year earlier.
Analysts on average had expected $2.22 a share, according to Thomson Reuters IBES.
Revenue totalled $11.9bn, below expectations of $11.99bn, and was up in all of FedEx’s major business segments.
Volumes at FedEx Ground in the United States were up seven per cent for the quarter, but revenue per package fell two per cent due in part to lower fuel surcharges, which declined as fuel prices come down.
Package volumes were up five per cent in the international economy business and rose one per cent in the international priority business.
FedEx said it benefited from an ongoing profit improvement plan, falling fuel prices and lower pension expenses, partly offset by aircraft maintenance costs.
The company still expects earnings per share of between $8.50 to $9.00 for the year ending 31 May, while analysts have forecast $9.14.
Analysts said results from FedEx Ground and trucking unit FedEx Freight, in particular, fell short.
The company’s full-year outlook was also seen as too conservative by many investors. FedEx shares fell as low as $163.95 in New York yesterday but recovered to close down 3.7 per cent to $167.75.