FedEx 4Q profit drops as economic growth is weak
The FedEx Ground business in Moon was spared the downsizing that is eliminating about 3,600 jobs at the parent FedEx Corp., which posted a 45 percent drop in quarterly earnings on Wednesday.
The package delivery unit, FedEx Ground, employs nearly 3,000 people locally out of the corporation's total workforce of more than 300,000. It operates three shipping facilities in the Pittsburgh region.
FedEx Corp., based in Memphis, is cutting jobs as a result of a voluntary separation program it announced last October to boost profits. The workers will leave the company by next May.
The “overwhelming majority” of the FedEx employees who accepted the buyout do not work for FedEx Ground, said spokesman Jess Bunn. Nearly all work for international shipping unit FedEx Express or for FedEx Services, which provides marketing, information technology and sales support for the corporation.
“FedEx Ground posted another strong year,” said FedEx Corp. CEO Frederick Smith in a statement. The company's fiscal year ended May 31.
Annual revenue at the Moon-based business increased 10 percent to $10.6 billion, and operating profit rose 1 percent to $1.8 billion. The unit's revenue for the fiscal fourth quarter jumped 12 percent to $2.78 billion, but operating profit declined 6 percent to $464 million.
Results at the parent company were more stressed.
FedEx Corp. earned $303 million, or 95 cents per share, in the fourth quarter, which ended May 31. That's down from $550 million, or $1.73 per share, a year earlier. Severance and other restructuring costs totaled $496 million after taxes. Revenue rose 4 percent to $11.44 billion, just below analysts' forecast of $11.46 billion.
For the full year, earnings fell 23 percent to $1.56 billion, or $4.91 a share. Revenue rose 3.7 percent to $44.3 billion.
Company profits were hurt by “tepid economic growth and customer preference for less costly international shipping services,” Smith said.
To pare costs and boost profits, FedEx Corp. is retiring 10 aircraft and their related engines. The company, the world's largest cargo carrier, wants to cut annual spending by $1.7 billion by 2016.
The company has been dealing with a slump in high-end express-delivery services as customers try to save money by picking cheaper but slower shipping options. FedEx Express plans to further cut delivery capacity between Asia and the United States in July.
FedEx said it expects earnings per share to increase between 7 and 13 percent in the year ending next May 31.
Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or email@example.com. The Associated Press contributed to this report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Operating loss widens at Highmark parent
- Stocks fall for 2nd straight day as corporate earnings concerns deepen
- Pennsylvania grid operator might delay power auction for new rules
- Anchor Hocking parent EveryWare files for Chapter 11
- Consol Energy files for IPO of coal spin-off
- Summer blend to boost gasoline prices over next month
- Pa. Gas & Electric agrees to $6.8 million settlement of polar vortex claims
- Conventional gas, oil drillers seek rules differing from shale industry in Pennsylvania
- Stocks of Pittsburgh-area companies set record in March
- Pittsburgh region’s unemployment rate stays steady
- U.S. Steel considers temporary shutdown of Minn. plant