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PLAY BEAT THE STREET GAME NOW
FedExFDX cut its expectations for fourth-quarter earnings, citing higher fuel prices and a weakened economy. The package-delivery operator said it now expects earnings for the quarter ending May 31 to be $1.45 to $1.50 a share, compared to its prior forecast of $1.60 to $1.80 a share. "Since we provided earnings guidance for the fourth quarter in March when the crude oil price was slightly above $100 per barrel, our estimated fuel costs for the quarter have increased more than 7 percent, or $100 million from our previous estimate, and the weak economy has restrained demand for U.S. domestic express package and LTL freight services," said Chief Financial Officer Alan B. Graf, Jr., in a press release. "While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices. This revised outlook assumes no additional increases to the current fuel price environment and no further weakening of the economy," Graf said. Shares of FedEx slumped 3% in recent after-hours trading to $87.69. Last month, FedEx rival UPSUPS cut its expectations for first-quarter results, which it reported on April 23. At that time, UPS said it saw "no signs of economic strengthening in the second quarter." UPS was off 1.7% to $69.10 in after-hours trading following the FedEx news.
The March on-time arrival rate of 79.1% meant the airline was also the best in the first quarter, with an on-time rate of 78.3%.
Should these two carriers try again to complete the merger effort that failed earlier this decade, they'll have to cope with substantial route overlap and labor issues.
With Congress about to take up climate-change legislation, some carriers worry that they won't be rewarded as much as other industries for their energy-conservation measures.
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