Albief15

News
FedEx profit and forecast disappoint, stock down

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CHICAGO, Dec 20 (Reuters) - Package delivery company FedEx Corp. reported lower-than-expected quarterly profit on Wednesday and forecast earnings in the current period below Wall Street estimates.

FedEx, whose stock fell more than 4 percent in electronic trading before the stock market opening, reported net income of $511 million, or $1.64 a share, for the fiscal second quarter ended Nov. 30, compared with $471 million, or $1.53 a share, a year earlier.

Wall Street analysts had expected $1.76 per share.

FedEx said its new labor agreement with its pilots, ratified by the pilots' union in mid-October, reduced earnings by about 25 cents a share.

The Memphis, Tennessee-based company reported robust revenue increases at its express delivery, ground delivery and freight units, but FedEx Kinko revenue fall 2 percent.

The company said it expects fiscal third-quarter earnings of $1.20 to $1.35 per share, well below analysts' average forecast of $1.54.

In a statement, however, Chief Executive Officer Fred Smith was upbeat on the company's performance during the important holiday season.

"Package volumes are solid this holiday season, and we see continued global economic growth in 2007," he said.

In pre-market trading, FedEx shares were down $3.50 at $110.50, but up from a low of $109.13.

Reuters News

December 20, 2006


Geez--new contract payrates in effect 2 months but yet we somehow pull things down? Perhaps they could have posted "FedEx profits artificially high after avoiding negotiations with workforce for last 12 consective quarters...."

Overnitefr8

Actually they only had been in effect for 1 month for this report. I think I our quarter ended November 30. The contract took affect at the end of October.

HoursHore

Profit Actually increases yet the stock goes down, because it didn't meet some eggheads "expectations" based upon previous conditions.

Happy Camper

Here's 2 more articles that also blame the pilots:

Ground Package Volume Increases 14 Percent
MEMPHIS, Tenn.--(BUSINESS WIRE)--FedEx Corporation (NYSE: FDX) today
reported earnings of $1.64 per diluted share for the second quarter ended
November 30, compared to $1.53 per diluted share a year ago. The quarter’s
results included costs associated with the new pilot labor contract at FedEx
Express. The net effect of this agreement reduced second quarter earnings by
approximately $0.25 per diluted share. Excluding these costs, second quarter
earnings were $1.89 per diluted share, an increase of 24% from last year’s
second quarter.

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FedEx Express Segment

For the second quarter, the FedEx Express segment reported:

Revenue of $5.69 billion, up 6% from last year’s $5.37 billion
Operating income of $502 million, up 5% from $476 million a year ago
Operating margin of 8.8%, down from 8.9% the previous year
Operating margin was negatively affected by costs associated with the new
pilot labor contract. The new contract includes signing bonuses and other
upfront compensation of approximately $143 million, as well as pay increases
and other benefit enhancements, which were partially mitigated by reductions
in variable incentive compensation. These costs more than offset the benefit
from revenue growth, declining fuel prices and revenue management actions.

Laughing_Jakal

The line I liked was that some of the pilot costs were mitigated by reduced variable incentive program costs

JethroFDX

YGBSM!

MD11HOG

So our cost just comes out of bonus money? I think we might have sold out a little cheaply.

Fedex999999

Gee, if they really wanted to see some problems, they should have gone thru another peak without a contract....

Bitme

Two words for everyone blaming the pilots.

BL@W ME!

sandman2122

Funny how the media never mentions the retirement packages many of the FedEx executives receive - which in the past have included $30K John Deere Tractors.........

and that's a fact Jack!