FedEx Doubles Profit, to Merge Units

FedEx said it will lay off 1,700 as it merges two divisions, and issued new guidance.
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MEMPHIS (

TheStreet

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FedEx

(FDX) - Get Report

said earnings rose 107% on strong demand from an improving economy and the overnight package company increased its full-year and current quarter guidance.

FedEx also said Thursday it would merge its freight and less-than-truckload freight operations, resulting in the loss of 1,700 jobs and the closure of 100 facilities.

Net income was $380 million, or $1.20 a share, in the fiscal first quarter, which ended Aug. 31. Analysts surveyed by Thomson Reuters had estimated $1.21. Revenue rose 18% to $9.5 billion; analysts had estimated $9.4 billion.

In the same period a year earlier, FedEx earned $181 million, or 58 cents a share. It had guided towards earnings of $1.05 to $1.25 a share.

"Strong demand for our services resulted in higher volumes and better revenue per shipment at FedEx Express and FedEx Ground," said CEO Fred Smith, in a prepared statement. "This increased demand comes from improved global economic conditions" and from the strength of the company's global network.

Looking ahead, the company projected fiscal second-quarter earnings of $1.15 to $1.35 a share. Analysts estimate $1.36. FedEx raised fiscal 2011 guidance to between $4.80 and $5.25 a share, while analysts were estimating $5.22.

Including one-time costs from a planned merger of FedEx Freight and FedEx National LTL operations effective Jan. 30, 2011, which was announced Thursday, earnings are expected to be between 97 cents and $1.21 in the second quarter and between $4.40 and $4.95 for the fiscal year. The merger will cost an estimated $150 million to $200 million, charges that will be taken in the current quarter and the fiscal third quarter.

In premarket trading, FedEx shares were trading down $2.14 to $83.80.

-- Written by Ted Reed in Charlotte, N.C.

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Ted Reed