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FedEx has plan to keep profit high

| Tuesday, Oct. 9, 2012, 10:06 p.m.

MEMPHIS — FedEx Corp. will take steps to cut costs and boost profit by $1.7 billion during the next three years to reposition the company as customers shift to slower, cheaper deliveries from costlier overnight shipments.

Chief Executive Officer Fred Smith set that target on Tuesday in a speech to analysts and investors in Memphis without saying how the goal will be achieved. Details, including savings and efficiency gains, will be made public at a meeting starting at 9 a.m. on Wednesday.

The changes will allow the operator of the world's largest cargo airline to “deliver the performance to ensure the near- and long-term success of FedEx,” Smith said in prepared remarks. “We believe we can do this even in low-growth environments for global trade and within the major economies.” The size of the target reflects FedEx's view that the move of some customers to ground, freight and even ocean shipping is permanent and not a temporary change linked to a slowing economy.

FedEx also announced that David F. Rebholz, president and chief-executive officer of Moon-based FedEx Ground, will retire effective May 31.

Rebholz, a native of Milwaukee who will be 60 when he retires, has led FedEx Ground operating unit since January 2007. He also serves on the Strategic Management Committee of FedEx Corp. A successor will be named later.

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