Fedex falls on expectations

 
City A.M. Reporter
FEDEX forecast profit for the current quarter that missed expectations and its chief executive warned that the economic recovery’s pace may slow, pushing shares down more than three per cent.

The company said profit in its fiscal first quarter that ended 31 August was $380m (£243m) compared with earnings of $181m a year earlier.

Revenue rose 18.1 per cent to $9.46bn, topping the consensus Wall Street estimate of
$9.42bn.

The company, seen as an economic bellwether because its planes and trucks ship a variety of merchandise around the world, has been on a strong growth footing in recent months, and raised its profit forecast for its full 2011 fiscal year for the second time.

It also said its first-quarter profit more than doubled as business and consumer spending sparked more demand for its package delivery services

But chief executive Fred Smith said he expects the pace of the world’s economic
recovery to slow in the months ahead.

“We expect a phase of somewhat slower economic growth going forward,” said Smith.

The Memphis, Tennessee-based company forecast a second-quarter profit below Wall Street’s expectations, and said some costs would rise this fiscal year as it resumes some employee benefit programs that it had halted during the worst of the recent recession. Demand for air freight has surged as businesses – particularly Asian electronics makers – rely more heavily on overnight shipment of components, rather than keeping large inventories in warehouses, company officials said.