FedEx Corporation (NYSE:FDX), the world’s second largest shipping company reported a 1 percent decline in profit for the first quarter of 2013 ending in August 31 and reduced its full year outlook due to the weakening global economy.
The company expects a full year profit of $6.20 to $6.60 per share, lower than its previous estimate of $6.90 to $7.40 a share. The consensus full-year profit estimated by analyst was $7.03 per share.
In a statement, Alan Graf, Jr., executive vice president and chief financial officer said, “Weak global economic conditions dampened revenue growth, drove a shift by our customers to our deferred services, and outpaced our near-term ability to reduce FedEx operating costs to match demand levels.”
FedEx Corporation (NYSE:FDX) president and chief executive officer Frederick Smith said the company’s ground and freight segment performed well during the quarter, and the company is taking further actions to reduce costs and adjust networks to match its current and anticipated shipment volumes.
The company reported earnings of $1.45 per share or $459 million y/y, down by one penny compared with its $1.46 per share or $464 million earnings last year. FedEx earnings result was higher than the $1.41 per share average earnings estimate by analysts as well as the $1.37 to $1.43 per share projected earlier by FedEx.
FedEx Corporation (NYSE:FDX) also reported $10.79 billion revenue, up by 3 percent compared with the $10.52 billion revenue during the same quarter a year ago. Its operating income was $742 million, 1 percent higher than the $737 million last year. The company’s operating margin was 6.9 percent.
Analysts from Deutsche Bank Markets Research noted, “FedEx full-year outlook does not include the impact of any cost reduction program currently under review and has incorporated the current market outlook for fuel prices.”
According to the analysts, it is significant for the company to provide further details regarding its restructuring programs, if not its shares might continue to trade lower. Deutsche Bank analysts target price for FedEx stock was $115 per share. The company’s stock is down by 1.88 percent to $87.60 per share during the morning trading at the New York Stock Exchange.
