FedEx Corp?s announced that its profit dropped 11.9 percent in the second quarter. This was less than what investors predicted as the second largest package delivery company in the US struggled to improve its results at its air freight business.
The demand for air express shipments has dropped as customers opt for slower and less expensive alternatives of delivering goods. The declines were in part offset by the strong growth at the company?s unit that delivers goods by truck.
FedEx will undergo a restructuring where it plans to cut jobs. It announced a buyout offer to its employees in the hopes of trimming costs at the air express unit, which experienced a decline of around 33 percent.
FedEx said that it got fiscal second quarter earnings of $438 million or $1.39 per share. This was down from $497 million or $1.57 a share from last year. Superstorm Sandy caused earnings to drop around 11 cents per share.
If the charges were factored out, profit per share would be $1.50, which is more than the $1.41 analysts estimated. Consumers went from premium products to more economy products. They are willing to wait for their deliveries.
After the profit announcement, FedEx shares increased 3 percent to $95.24, which is its highest since March. Its ground business is taking market share from its larger rival, United Parcel Service. Officials predict that they would win in the long run.
FedEx?s revenue increased 4.7 percent to $11.1 billion from $10.6 billion the previous year. The company is still on track with its profit forecast for 2013 where it expects to earn $6.20 a share to $6.60 a share for the fiscal year ending in May. Last September, the company slashed its forecast by around 10 percent.
The estimate didn?t account for the costs of buying out thousands of workers that could reach the total of $550 million to $650 million. During the end of its last fiscal year, FedEx employed around 300,000 across the globe.
Source: http://www.paydayloansmag.com/fedex-profit-falls-less-than-investors-forecast/
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