FedEx Will Cut Costs, Raise Profits

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Shares of FedEx Corp. (NYSE: FDX) are up more than 4% today after the company said it plans to raise profit by $1.7 billion in the next three years, some of which will come from parking older, less fuel-efficient airplanes and delivery trucks. About $1.6 billion of the profit expectations are planned to come from the company’s Express division, it’s largest group.

About $700 million of the profit growth is expected to come from replacing 5,000 delivery trucks and reconfiguring the company’s international and domestic delivery networks. Replacing older airplanes is expected to generate another $300 million and $400 million more will come from consolidating back-office operations.

FedEx also expects several thousand U.S. employees to select a voluntary buyout program the company offered in August. Details of the buyout plan are not due until next Spring.

The company also lowered its global GDP growth forecast to 2.6%, down from the 2.7% forecast it made just last month. FedEx noted that its new profit plan does not rely on a major improvement in global GDP through the end of 2013. That’s probably wise, given all the other weak GDP growth projections out there now.

FedEx shares are up more than 5% at $89.92 in a 52-week range of $72.60 to $97.19.

Paul Ausick

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