If FedEx Corp. is indeed a bellwether stock, then the company’s forecast for the global economy can’t be good news. FedEx said on Thursday that things are not so rosy.
“We just don’t have a strong economy as we had hoped it would be a year ago,” chief financial officer Alan Graf said on an earnings call shortly after reporting strong quarterly results, according to Bloomberg News.
Forget about its call for global economic growth of 2.9 per cent in 2012. That forecast has been slashed to 2.3 per cent. For the U.S. economy, it sees growth of just 2.1 per cent, which is shy of what a consensus of economists surveyed by Bloomberg are forecasting.
Bloomberg also reported that FedEx was parking an unspecified number of planes and cutting back on flight hours because shipments just aren’t what they expected. U.S. shipments within its Express unit fell 4 per cent in the last quarter; international priority shipments of small packages retreated 1 per cent.
This isn’t what you might expect with economic activity showing some encouraging signs recently. Sure, there are growth scares in China and Europe seems to be in a recession. But U.S. employment has been picking up and Europe’s sovereign-debt crisis has gone quiet, pushing aside some of the biggest concerns about the global economy right now. Even the normally dour Federal Reserve acknowledged in its last monetary policy statement that things looked a little better.
Curiously, FedEx’s caution comes after a fine quarter: Its net earnings more than doubled to $1.65 (U.S.) a share from last year, and operating earnings blew past analysts’ expectations.
Meanwhile, its share price has been sending conflicting signals about the broader market: While the shares are up about 40 per cent since October – essentially over-describing some of the recent enthusiasm in the stock market – they’re merely back to where they were two years ago.