FedEx Lowers Its Earnings Guidance

This is the second announcement of expected lower earnings by FedEx in the past month or so. The carrier’s second quarter ends on November 30 with earnings to be announced December 20. Expectations are that earnings will be in the $1.45 to $1.55 range per diluted share. The previous forecast was for quarterly earnings between $1.60 and $1.75. For the full year earnings have been reduced from $6.70 to $71.10 per diluted share to between $6.40 and $6.70.

In commenting on the announcement, Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer, says, "Since we provided earnings guidance for the second quarter in September, our fuel costs have increased more than 8%, or $85 million. While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices. In addition, less-than-truckload freight trends in the FedEx Freight segment remain weak, despite economic signs that the decline in US industrial production has hit bottom. We are taking prudent steps to reduce expenses, and are reviewing our capital investment plans for further reductions."

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