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FedEx 1st-qtr profit falls, meets Wall St. views, as cost cuts partially offset slow growth

NEW YORK (AP) -- FedEx Corp. said Thursday its fiscal first-quarter earnings fell 22 percent, but still met Wall Street's expectations, as cost cuts partially offset the impact of slowing global growth.

The package delivery company also predicted it will beat analysts' current expectations for its fiscal second quarter, and said it will hike shipping rates at its Express unit starting early next year.

Memphis, Tenn.-based FedEx earned $384 million, or $1.23 per share, in the three months ended Aug. 31, compared with $494 million, or $1.58 per share, a year earlier.

Revenue rose 8 percent to $9.97 billion from $9.20 billion a year ago.

A Thomson Reuters poll showed analysts, on average, were expecting profit of $1.23 per share on revenue of $9.92 billion.

"Global economic conditions are challenging, but FedEx is taking strong, proactive actions to manage through this difficult cycle," said Frederick W. Smith, FedEx chairman, president and chief executive.

FedEx said cost-cutting efforts were countered by global economic weakness and still-high fuel prices. The company also said its higher fuel surcharges are dampening demand. Although the price of jet fuel slipped toward the end of the quarter, FedEx still paid an average of 77 percent more year-over-year.

Growth in its ground and international-domestic express units and from a postal service deal was "substantially offset by a continued decline in U.S. domestic express shipments," FedEx said.

For the second quarter, FedEx expects to earn $1.40 to $1.60 per share, well above Wall Street's average forecast of $1.35 per share for the period. The company earned $1.54 in the year-ago second quarter.

For the full year, the company maintained its profit forecast of $4.75 to $5.25 per share, citing slowing global growth. Analysts, on average, currently expect $5.18 per share. FedEx said the predictions incorporate current fuel prices.

FedEx's Express unit will raise rates by an average of 6.9 percent for U.S. and U.S. export services, beginning on Jan. 5. The company said the rate hike will be partially offset by a slightly lower fuel surcharge.