Recovery? FedEx Earnings Forecast Trails Estimates on Sluggish Recovery
By Mary Schlangenstein and Mary Jane Credeur
June 16 (Bloomberg) -- FedEx Corp., the world’s largest air-cargo carrier, forecast annual profit that trailed analysts’ estimates on a slower pace of recovery for express shipments.
Earnings for the fiscal year that began June 1 will be $4.40 to $5 a share, the Memphis, Tennessee-based company said today in a statement. Analysts projected $5.07, the average of 21 estimates compiled by Bloomberg.
The forecast suggests global shipping growth may be slower than some investors and analysts anticipated. FedEx faces higher pension costs, as well as expenses for restored contributions to employee retirement accounts and for raises after halting both in the recession. Profit this quarter will be 85 cents to $1.05 a share, compared with analysts’ estimates of $1.02.
Earnings growth will be “constrained by significant increases in fixed pension” and aircraft-related costs, Alan Graf, chief financial officer, said in the statement.
FedEx fell $1.90, or 2.3 percent, to $81.11 at 7:51 a.m. before the start of New York Stock Exchange composite trading. The shares have dropped less than 1 percent this year.
FedEx’s annual forecast has missed analysts’ estimates in seven of the past eight years and “similar risk exists this year given returning expenses to support growth, benefits restoration and pension costs,” Jon Langenfeld, an analyst at Robert W. Baird & Co., wrote in a June 1 note to clients.
The Milwaukee-based analyst rates FedEx shares “neutral”
FedEx also reported net income of $419 million, or $1.33 a share, for the quarter ended May 31. The results met the average estimate from 18 analysts’ projections compiled by Bloomberg. Revenue rose 20 percent to $9.43 billion.
To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net
Last Updated: June 16, 2010 08:00 EDT
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