All short FDX, raise your hands. Stock down $5 based upon rising fuel costs, competition. "FDX 1st-Qtr Net Rises 6.7%; Fuel Costs Hurt Outlook (Adds details on competition. Updates shares.)
Memphis, Tennessee, Sept. 16 (Bloomberg) -- FDX Corp.,
parent of Federal Express, the world's largest express-delivery
company, said fiscal first-quarter profit rose 6.7 percent and
warned it may not meet forecasts for the second quarter and year.
Net income for the quarter ended Aug. 31 climbed to $159
million, or 52 cents a share, from $149 million, or a split-
adjusted 50 cents, a year earlier. The profit fell short of the
54-cent average analyst estimate in a survey by First Call Corp.
FDX said international shipments helped overcome lower-than
expected increases in U.S. deliveries. A further rise in fuel
prices and decline in domestic deliveries could push fiscal
second-quarter and full-year earnings below analysts' estimates,
and higher fuel prices may erode fiscal year 2000 operating
income by more than $150 million, the company said.
``FDX may not achieve a double-digit operating income growth
rate for the year,' said Chief Financial Officer Alan Graf.
FDX shares fell 4 3/8, or 10 percent, to 39 5/16 in early
trading. The stock of the Memphis, Tennessee-based company has
declined 12 percent this year.
The company was forecast to earn 68 cents a share in the
second quarter and $2.44 a share for the full fiscal year,
according to First Call.
Revenue rose 5.8 percent to $4.32 billion from $4.08
billion.
More Overseas Demand
Improving economies in Asia have spurred demand for overseas
shipments, while FedEx has lost business to the U.S. Postal
Service and United Parcel Service of America Inc.'s ground
service, analysts said.
Competitors' ground-service improvements are making FedEx's
air express less appealing, analysts said. Last year, UPS started
a service that lets customers specify the delivery date. The
Postal Service has improved its service by flying more of its own
planes instead of using commercial aircraft.
Rivals of FDX also have cheaper rates for some services. A
FedEx letter package from Chicago to Seattle in two days costs
$9.75, according to www.iship.com, a Web site that offers
shipping comparisons. UPS sells the same service for $7.25, and
the Postal Service charges $3.20 for two-to three-day service
that's not guaranteed, the Web site says.
The Postal Service's volume of two-day shipments within the
U.S. rose 9.4 percent last year to 1.16 billion pieces from 1.06
billion in 1997. UPS domestic volume, including air and ground,
rose 3.5 percent in the most recent quarter from a year earlier.
Blurred Lines
FedEx isn't the only company struggling in the U.S. express
business. Airborne Freight Corp., parent of Airborne Express, saw
its second-quarter profit fall 20 percent, in part because its
U.S. shipments slipped 0.7 percent from a year earlier.
FDX expects its RPS Inc. unit, the No. 2 small-package
ground carrier, to grab some of the market for deliveries that
are less time-sensitive, though the company hasn't announced a
target. FDX recently said FedEx's domestic express volume was
relatively flat by design, to increase RPS's business.
RPS will handle more smaller parcels that don't need next-
day delivery, while FedEx will focus on higher-margin box
shipments, the company said.
RPS also is expected to help the company get more deliveries
of products ordered on the Internet. In the past two months, RPS
has tested a home-delivery program in the Pittsburgh area, which
could expand throughout the U.S. as early as March. Fewer than 10
percent of RPS orders now go from businesses to residences." |
