Package delivery company FedEx Corp said on Wednesday that quarterly earnings fell and warned its growth targets would be at risk if the US economy did not improve.
The company, whose shares fell nearly 2 percent, cited a slower economic environment, lower fuel surcharges and severe winter storms for the lower profit, which nonetheless exceeded Wall Street estimates. It also gave a current-quarter outlook whose top end was above analysts' expectations.
Net income fell to $420 million, or $1.35 a share, in the third quarter ended February 28, from $428 million, or $1.38 a share, a year earlier. Wall Street analysts had on average expected $1.33 per share.
"The US economy grew at a lower rate than we expected in the third quarter, and we saw continued adjustments in the automotive and housing markets," FedEx Chief Executive Frederick Smith said in a statement. Like main rival United Parcel Service Inc, Memphis, Tennessee-based FedEx is seen as a bellwether of US economic activity.
FedEx forecast fourth-quarter earnings of $1.93 to $2.08 per share. Analysts were expecting $2.03. The company also said it expected fiscal 2007 profit of $6.45 to $6.60 a share, compared with analysts' forecasts of $6.77. Excluding the impact of a new contract with its pilots, FedEx's full-year outlook would be in a range of $6.70 to $6.85 a share. In the latest quarter, FedEx said winter storms had reduced earnings by an estimated 6 cents a share, offset by a tax reduction of 8 cents a share.
Revenue rose 3 percent to $5.52 billion at the company's FedEx Express delivery unit and increased 12 percent to $1.52 billion at FedEx Ground.