The cost of funding an early retirement program drove down earnings at
in the first quarter compared with last year, but the company managed to beat analysts' estimates on an operating basis.
The Memphis-based courier earned $128 million, or 42 cents a share, on revenue of $5.69 billion in the latest quarter, compared with earnings of $158 million, or 52 cents a share, on revenue of $5.45 billion a year ago. The latest quarter included a pretax charge of $132 million, or 27 cents a share after tax, related to the early retirement program, and a gain from a tax ruling of 8 cents a share.
FedEx's cost side was also swollen by a 10% rise in its quarterly fuel expense to $322 million.
Excluding the items, FedEx earned 61 cents a share. Analysts polled by Thomson First Call were predicting earnings of 57 cents a share on that basis and revenue of $5.79 billion. FedEx's share were recently down 62 cents, or 1%, to $65.46.
The company forecast second-quarter earnings of 80 cents to 90 cents a share, and full-year earnings before items of $3 to $3.15 a share. The First Call consensus estimates are 90 cents and $3.25 a share, respectively. With restructuring costs, the company expects to post GAAP earnings of 53 cents to 57 cents a share in the second quarter and $2.75 to $2.96 a share for the year.
FedEx expects the cost of the ongoing headcount reductions to come in at the high end of a $230 million to $290 million range in the year ending next May and result in savings at the high end of $100 million to $130 million, leaving a net cost to the company of $130 million to $160 million. In fiscal 2005 and beyond, the estimated annual savings from these programs remains $150 million to $190 million, FedEx said.
The company has also changed the way it will break down future financial reports and will now report in three segments: FedEx Express, FedEx Ground and FedEx Freight. In the first quarter, the FedEx Express, the area subject to the restructuring, produced 73% of the revenue.