Package delivery company FedEx Corp reported a better-than-expected quarterly net profit yesterday but forecast full-year earnings below analysts’ estimates as it looked for the global economy to grow at a lacklustre rate.
Memphis-based FedEx also said fuel expenses were reduced by 30% due to low oil prices but its international business was hurt by falling fuel surcharges and the strong dollar.
The quarter included the company’s crucial peak holiday season in the US. “We had a very successful peak season as volumes grew across all our segments,” Chief Executive Officer Fred Smith said on a conference call with analysts.
Last month, FedEx’s main rival, United Parcel Service, reported a disappointing quarterly profit due to soaring costs during peak season. Atlanta-based UPS mobilised more workers and equipment for an anticipated surge in holiday packages, but the extra business failed to materialise, forcing the company to begin applying surcharges for residential packages during this year’s peak season.
FedEx’s operating expenses rose just 1% during the quarter, while UPS’ expenses jumped nearly 16% during the fourth quarter, which also included a charge related to pensions.
FedEx said on its earnings call it expects the US economy to grow at a rate of 3.1% in both 2015 and 2016. FedEx said fiscal third-quarter net profit soared 53% to $580mn, or $2.01 per share, from $378mn, or $1.23 per share, a year earlier. Analysts expected earnings per share of $1.87.
Revenue for the quarter ended February 28 totalled $11.7bn, up nearly 4% from $11.3bn a year earlier. Analysts estimated $11.79bn.
The company expects full-year earnings in a range of $8.80 to $8.95 per share, which it said “assumes continued moderate global economic growth.”