FedEx Corp. lowered its fiscal 2013 profit target on Tuesday, saying earnings could slide as much as 6 per cent for the year, as a weakening world economy prompts customers to shift toward lower-priced and slower shipping options.
The world’s second-largest package delivery company said it now expects profit for its fiscal year, which ends in May, to come to $6.20 (U.S.) to $6.60 per share, below its prior forecast of $6.90 to $7.40 a share.
Wall Street had expected a full-year profit of $7.03 per share.
“Weak global economic conditions dampened revenue growth (and) drove a shift by our customers to our deferred services,” Chief Financial Officer Alan Graf said in a statement.
Earlier this month, FedEx had warned the slowing economy was hurting its results, following larger rival United Parcel Service Inc, which in July cut its 2012 profit forecast.
Net income for its fiscal first quarter that ended Aug. 31, was $459-million, or $1.45 per share, down 1 percent from $464-million, or $1.46 per share, a year earlier.
That figure is well below the $1.56 analysts on average had looked for prior to the company’s profit warning early this month, but above Wall Street’s revised earnings target of $1.40 per share, according to Thomson Reuters I/B/E/S.
Total revenue rose 3 per cent to $10.79-billion.
Profit was heavily weighted by the company’s express segment, which handles overnight package delivery by aircraft, where operating earnings fell 28 per cent. The segment reported a 5 per cent drop in U.S. package deliveries.
Memphis, Tennessee-based FedEx said it will raise its average shipping rates 3.9 per cent in the United States starting Jan. 7.