BEIJING, May 11 -- FedEx Corp has cut its fourth-quarter earnings
expectations, blaming continuing increases in fuel costs.
The Memphis-based shipping company said on Friday that it expects profits
of 1.45 U.S. dollars to 1.50 dollars per share for the three months ended May
31, down from its previous prediction of 1.60 dollars to 1.80 dollars.
Analysts surveyed by Thomson Financial predicted quarterly earnings of 1.69
dollars, down from earlier expectations of 1.95 dollars.
"Since we provided earnings guidance for the fourth quarter in March when
the crude oil price was slightly above 100 dollars per barrel, our estimated
fuel costs for the quarter have increased more than 7 percent, or 100 million
dollars from our previous estimate," said FedEx chief financial officer Alan B.
Graf Jr.
FedEx customers pay surcharges to help offset fuel costs, but "they cannot
keep pace in the short-term with rapidly rising fuel prices," Graf said.
He said the new earnings forecast "assumes no additional increases to the
current fuel-price environment and no further weakening of the economy."
Oil rose above 126 dollars a barrel for the first time on Friday, bringing
its advance for the week to nearly 10 dollars.
FedEx also said the weak U.S. economy is holding down demand for domestic
express shipments and less-then-truckload freight services. The company is often
seen as a bellwether for the U.S. economy.
But the company's difficulties in financial predictions are due to
fluctuating fuel costs, said analyst Dan Ortwerth of Edward Jones.
"We had already expected a weak domestic economy, but fuel costs these days
defy predictions," he said. "At this point, the predictions for the price of
fuel are all over the map."
In March, FedEx reported a 6-percent drop in third-quarter earnings, also
citing high fuel costs and the sluggish economy.
The company at that time said it expected lower earnings for the fourth
quarter, and predicted limited growth for the fiscal year.
FedEx shares fell 2.84 dollars, or more than 3 percent, to 90.37 dollars on
Friday. In after-hours trade, they declined to 87.41 dollars.
(Source: Shanghai Daily/Agencies)
