FDX May Not Deliver on Profit
FDX Corp., parent of Federal Express, said rising fuel prices hurt its earnings in the fiscal first quarter and may keep it from meeting this year’s profit forecasts.
The world’s largest express-delivery company said net income for the quarter ended Aug. 31 rose to $159 million, or 52 cents a share, from $149 million, or 50 cents, a year earlier, as revenue rose 5.8% to $4.32 billion. The average analyst estimate was 54 cents in a First Call Corp. survey. Those forecasts already had been reduced two months ago.
FDX, which also faces sharper competition from rivals such as United Parcel Service of America Inc., said rising fuel prices could cut full-year profit at least $150 million, reducing annual earnings below estimates.
The Memphis company was forecast to earn 68 cents a share in the second quarter and $2.44 a share for the full year, according to First Call.
FDX won’t reach the second-quarter forecast because of fuel costs, said Alan Graf, chief financial officer.
The company is considering a fuel surcharge, though the issue is being “hotly debated,” Graf said.
International shipments helped FDX overcome a lower-than-expected rise in U.S. deliveries in the quarter. Domestic shipments grew 3% for Fed Ex and 4% for its RPS Inc. unit. Those gains were several percentage points lower than expected, Graf said, largely due to a decline in inventory by some major customers.
FDX is trying to cut costs with a hiring freeze and by delaying nonessential training and travel, Graf said.
Graf also said Hurricane Floyd had caused no major physical damage to FDX properties but was expected to result in a loss of some $15 million in business due to missed deliveries.
FDX shares slid $5.44, more than 12%, to close at $38.25 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Adobe Systems Inc. reported better-than-expected profit of $57.2 million, or 88 cents a share, in its fiscal third quarter, compared with $152,000, or break-even on a per-share basis, a year earlier. The results far exceeded the average estimate of 74 cents a share. Adobe attributed its results to strong sales in Web publishing software, the latest version of its Photoshop software and Acrobat. Revenue jumped 17% to $260.9 million. Adobe also said it will split its stock two for one. The earnings were announced after the close of trading.
* Nike Inc.’s profit grew 22% in its fiscal first quarter to $200.2 million, or 70 cents a share, boosted by back-to-school sales and strong demand for its basketball shoes. The results beat analyst estimates of 66 cents. Revenue was flat at $2.5 billion, as sales growth in Europe offset a decline in the U.S. and flat sales in Asia.
* Carnival Corp. said its earnings rose 20% in its fiscal third quarter to $415.1 million, or 57 cents a share, as the cruise operator added ships and Caribbean and Alaskan business offset the effect of the Kosovo conflict on European cruises. Analysts were expecting 64 cents. Revenue rose 10% to $1.17 billion.
* Circuit City Group said its fiscal second-quarter profit jumped 68% to $73.7 million, or 36 cents a share, matching estimates, on stronger sales of personal computers and products that use new digital technologies. Revenue grew 14% to $2.42 billion. The retailer said sales at stores open at least a year increased 10%, but it expects same-store sales growth to slow in the second half because of strong year-ago figures.
* General Mills Inc.’s profit rose 9.3% in its fiscal first quarter to $158.5 million, or $1.01 a share, as increased promotions lifted cereal sales and new products sparked demand for yogurt. Sales grew 7% to $1.57 billion.
