FedEx Corp. (NYSE: FDX) this morning reported first fiscal quarter earnings per share (EPS) of $1.45 on revenue of $10.79 billion. In the same period a year ago, the company reported EPS of $1.46 on revenue of $10.52 billion. First-quarter results compare to the Thomson Reuters consensus estimates for EPS of $1.40 and $10.70 billion in revenue.
The company’s chairman/president/CEO said:
As we announced on September 4, weakness in the global economy constrained revenue growth at FedEx Express during our first quarter and affected our earnings. Meanwhile, our FedEx Ground and FedEx Freight segments performed well, with both improving their year-over-year operating margins. We are taking further actions to reduce costs and adjust our networks to match current and anticipated shipment volumes.
FedEx forecast second fiscal quarter EPS at $1.30 to $1.45, well below the consensus estimate of $1.67. The company also lowered its full 2013 fiscal year EPS forecast from a range of $6.90 to $7.40 to a new range of $6.20 to $6.60. The consensus forecast called for EPS of $7.04.
The company’s CFO gave a concise explanation of the company’s problems:
Earnings for the first quarter were below our expectations as 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 Express operating costs to match demand levels.
FedEx will raise shipping rates by 5.9% in the U.S. beginning in January, which will result in an effective rate of 3.9% after adjusting the company’s fuel-price surcharge down by 2%. The company will announce FedEx Ground and SmartPost pricing changes later this year. FedEx had already raised FedEx Freight rates 6.9% in July.
Unlike so many others eager to jump over dramatically lower hurdles, FedEx essentially acknowledges that expectations were set so low following the company’s earnings warning that anyone could have jumped over them.
The company’s shares are down 1.7% in premarket trading this morning, at $87.71 in a 52-week range of $64.07 to $97.19.