FedEx Corp. (NYSE: FDX), the world's second-largest package delivery company, is scheduled to release fiscal third quarter earnings before the opening bell on Thursday, March 17, 2010. Analysts, on average, expect the company to report earnings of $0.83 per share on revenue of $9.62 billion. In the year ago quarter, the company reported earnings of $0.76 per share on revenue of $8.70 billion.
FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. It operates in four segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. Shipping firms such as FedEx and rival United Parcel Service (NYSE: UPS) are often considered a bellwether for the U.S. economy because the strength of their businesses serves as a useful gauge of activity in the broader economy.
In the preceding second quarter, the Memphis, Tennessee-based company's net income was $283 million or $0.89 per share, compared with a profit of $345 million or $1.10 per share in the previous year. Excluding charges, second-quarter earnings were $1.16 per share compared with $1.10 per share a year ago. Revenues for the quarter grew 12% to $9.63 billion from $8.60 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $1.31 per share on revenue of $9.70 billion.
Early in February, the company slashed its fiscal third quarter earnings guidance, citing loss of revenue and increased expenses on severe winter storms and higher-than-expected fuel prices. The company said that it currently expects adjusted earnings, excluding FedEx Freight combination costs, in the range of $0.70 to $0.90 per share for the third quarter, compared to the previous forecast in the range of $0.95 to $1.15 per share. "We experienced significant network disruptions in the U.S. and Europe and unusually high costs from severe winter storms. In addition, fuel prices continued to escalate since we provided our earnings outlook in December," said Alan Graf, FedEx Corp. executive vice president and chief financial officer. FedEx freight combination costs for the quarter are expected in the range of $0.12 to $0.08 per share. These costs will also impact earnings guidance for the full year, which the company will update when it announces third quarter earnings on March 17, 2011.
However, Mr. Graf said FedEx continued to experience strength in its business across all transportation segments and geographic regions. The company and its larger rival, United Parcel Service, are bellwethers of global economic health because the strength of their businesses serves as a useful gauge of activity in the broader economy.
In recent weeks, spiking oil prices amid political turmoil in North Africa and the Persian Gulf have taken a bite out of FedEx's share price. However, FedEx is well positioned to benefit from improving freight demand and faster-than-expected economic recovery. It's margins are expected to improve as economic health is a key determinant of package volumes. An economic recovery is almost always accompanied by improved business spending, and shipping is at the core of that.
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