FedEx lowers its 2013 profit view as stretched customers cut back

City A.M. Reporter
FEDEX lowered its 2013 profit target yesterday, saying earnings could slide as much as six per cent for the year, as a weakening world economy prompts customers to shift toward lower-priced and slower shipping options.

The world’s second-largest package delivery company said makers of electronics and mobile phones had begun to move more of their cargo on ships as pressure on their selling prices makes the cost of air freight harder to bear.

FedEx said it expected a profit of $6.20 to $6.60 per share for its fiscal year, which ends in May. That is below both its prior forecast of $6.90 to $7.40 and Wall Street’s estimate of $7.03.

Profit in the first quarter was heavily weighted by FedEx’s express segment, which handles overnight delivery by aircraft. Operating earnings in the segment fell 28 per cent, and US package deliveries were down five per cent.

Net income fell one per cent to $459m, or $1.45 per share, in the first quarter ended on 31 August from $464m, or $1.46 per share, a year earlier.