FedEx earnings soar 27%
FedEx earnings cheer investors
Company says strong international and U.S. economic growth fueled sales; shares rise.
June 21, 2006: 12:49 PM EDT
CHICAGO (Reuters) - Package delivery company FedEx Corp. said Wednesday that quarterly net profit increased 27 percent on strong international and U.S. economic growth, beating market expectations.
FedEx (up $5.14 to $113.46, Charts) stock jumped about 4.5 percent in early afternoon trading.
Analysts said FedEx's results showed a strong quarter and indicated that the global economy is doing well.
The Memphis, Tenn.-based company said net earnings for its fiscal fourth quarter ending May 31 rose to $568 million, or $1.82 a share, compared with $448 million, or $1.46, a year earlier.
Analysts, on average, expected earnings for the quarter of $1.77 a share, according to Reuters Estimates.
Often seen as a bellwether of the U.S. economy, FedEx reported revenue for the quarter of $8.49 billion, compared with $7.72 billion in the same quarter a year earlier.
"Overall, this looks like a pretty solid quarter for FedEx," said Peter Smith, an analyst at Morningstar.
"It also appears to be evidence that the global economy continues to hum along at a decent pace."
Analysts highlighted the robust growth of FedEx Freight, the company's less-than-truckload unit, where revenue in the fiscal quarter increased 15 percent, to $973 million from $843 million.
But FedEx Kinko's, which has not performed as well as expected since FedEx acquired the unit in February 2004, saw revenue fall to $542 million from $553 million.
"FedEx Kinko's performance continued to be constrained," Chief Financial Officer Alan Graf said in a conference call with analysts, but added that FedEx is working to improve the unit's results.
FedEx said that it expected earnings per share for its fiscal 2007 first quarter of $1.45 to $1.60. Wall Street analysts have forecast earnings of $1.42 per share, according to Reuters Estimates.
FedEx also said it expects full-year 2007 earnings per share of $6.45 to $6.80. Analysts have forecast full-year earnings of $6.73 a share, according to Reuters Estimates.
"We remain optimistic about the global economic environment for fiscal 2007 and our ability to effectively manage our business," FedEx Chief Executive Officer Frederick Smith said in a statement.
CFO Graf said in the conference call that FedEx plans capital expenditures of $2.9 billion in fiscal year 2007.