FEDEX Slashes Earnings Forecast

[dhalltoyo]

Parcel carrier FedEx on Friday cut its second-qaurter and full-year earnings forecasts, citing skyrocketing diesel prices and a weak LTL environment.

"Since we provided earnings guidance for the second quarter in September, our fuel costs have increased more than eight percent, or $85 million," said Alan Graf, FedEx’s chief financial officer. “In addition, less-than-truckload freight trends in the FedEx Freight segment remain weak, despite economic signs that the decline in U.S. industrial production has hit bottom.â€

FedEx, Memphis, Tenn., said in a statement that it now expects to earn $1.45 to $1.55 a share for the quarter ending Nov. 30, compared with its previous forecast of $1.60 to $1.75.

For the full year, FedEx said it expects to earn $6.40 to $6.70, down from $6.70 to $7.10.

The company is due to release earnings for its fiscal second quarter on Dec. 20.

FedEx ranks No. 2 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada.

 

[piper1]

Fedex Corp
FDX shares fell as much as 5 percent, touching their lowest level since early 2006.

FedEx
AP
FedEx cut its earnings forecast for the current quarter, citing higher fuel prices and weaker demand for less-than-truckload shipments.
Both FedEx and rival United Parcel Service Inc said recently they would hike delivery charges by 4.9 percent next year, but both also said they would cut fuel surcharges.


That last line bothers me. If they cut the FSC to their customers.......

 

[ATeam]

This fits right in with other indicators showing an economic slowdown is in progress. On a realted note, Starbucks announced today that for the first time ever, their number of customer visits declined.

 

[greg334]

Ah.. guys there is more to the story than what has been posted in the press. I won’t add that stuff because the experts can fill in the blanks.

But you know that the statement that “despite economic signs that the decline in U.S. industrial production has hit bottom†is somewhat a false positive and all real indicators say we are on our way down, not near the bottom.

And also the statement of the cutting FSC should give you a real solid idea what their plans could be for the company in the long term – tightening up of the fleets, reducing operating cost and maybe even go as far as a reorg on the horizon.

All sound familiar?

Ummmm.....

 

[davekc]

Darn.....my Fed stock took a dump today. A hit on the FSC shouldn't be that bad as they already took a pretty good percentage earlier this year.
Look for further cuts (or adjustments as they call it) as they need to maintain the wages and costs of their company fleet.













Davekc
owner
23 years
PantherII
EO moderator

 

[greg334]

Dave,

I think that if they get another bad report, they will go into what many of us call "Pfizer mode of operations" soon. The past changes all looked like they were getting ready for the 'squeeze' in the financial end which to me looks like their short term solution may be having to roll more operating functions into existing departments thus eliminating more departments or even whole groups, cut internal pte/fte more and retract the CC fleet somewhat.

FSC will be one thing that for CC can stay the same by shifting things around to keep some contractors happy.

 

[dhalltoyo]

Those with regular customer bases will always fair better than those who are weighted heavily on bid board freight.

I just read an article where one LTL carrier was increasing their rates to drivers and increasing their FSC to customers.

Imagine that...increasing the FSC in a down turn market. How can that be possible? Provide quality service, professional drivers and efficient infrastructure and you can charge for your services; you can increase your rates as needed.

In a "Free Market System", the cream always will rise to the top!