FedEx (NYSE: FDX) offered a tepid outlook Thursday for the quarter that ends in January, after reporting fiscal second-quarter results fell 30 percent from a year ago, according to Associated Press.
CEO Fred Smith said in a conference call that he believes the U.S. economy "reached a turning point" during the company's second fiscal quarter, which went from September to November. Smith noted industrial demand turned positive compared with last year and manufacturers started buying again in the period.
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The company, based in Memphis, Tenn., predicts earnings of 50 to 70 cents per share in the third quarter, well under analysts' expectations of 84 cents per share.
FedEx shares fell $4.72, or 5.2 percent, to $85.23 in morning trading.
The company's fiscal third-quarter, which began Dec. 1, is usually its weakest. It includes the typical slowdown in shipping after the holiday season. Predictions from FedEx and its larger rival UPS are considered an indicator of how the broader economy is faring, since they carry many products and packages for businesses and consumers. UPS reported lower third-quarter profit and revenue in October.
Despite FedEx's cautious prediction for its third-quarter, it forecast full-year earnings above what most Wall Street analysts expect. FedEx sees profit of between $3.45 and $3.75 per share, compared with the average analyst estimate of $3.46. FedEx said continued cost cuts will boost results.
In the September-to-November period, FedEx Corp. earned $345 million, or $1.10 per share, compared with $493 million, or $1.58 per share a year earlier. The results matched an announcement last week, when FedEx said earnings for the quarter would be higher than expected. Revenue fell 10 percent to nearly $8.6 billion.
Thomson Reuters says analysts expected profit of $1.06 per share on revenue of $8.46 billion.
FedEx reported double-digit sales declines in major segments including Express, Freight and Services. However, revenue in the company's Ground segment, in most cases the least-expensive shipping option, rose 3 percent mostly because of added volume from a partnership with the U.S. Postal Service and DHL's exit from the U.S. market.
The company said it will resume merit salary increases in 2010 and half of the 401(k) company match for most U.S. workers. The program was suspended a year ago.
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