Upbeat outlook for FedEx as delivery company foresees growth in demand

City A.M. Reporter
FEDEX, the world’s largest cargo airline, forecast improved revenue and margins in the current quarter and beyond, and sees more shipments for reconstruction in Japan.

The brightening outlook overshadowed lower earnings for the fiscal third-quarter, ended 28 February, which was slammed by severe winter storms and spiking oil prices.

The package delivery company said fourth-quarter profit should rise to a range of between $1.66 to $1.83 per share, compared with the Wall Street view of $1.66 a share.

FedEx and United Parcel Service, the largest package delivery company, are considered economic bellwethers.

FedEx said rising oil prices that drag on the economy are a concern this year, and the near-term impact of the earthquake and tsunami in Japan is “uncertain”.

“There will be more traffic going into Japan for reconstruction purposes” and for humanitarian relief in the midst of an earthquake, tsunami and nuclear crisis, chief executive Fred Smith said.

Winter storm disruptions and spiking oil costs hurt profit in the third-quarter, but revenue topped forecasts.

Net profit fell three per cent to $231m (£143m), or 73 cents per share, from $239m, or 76 cents per share, a year earlier.