FedEx Offers Lackluster Outlook--Update

By Tess Stynes 

FedEx Corp. issued lackluster guidance for its new fiscal year as the package-delivery giant said its also will spend more again this year to bulk up its ground operations to tackle higher volume from online shopping.

Shares fell 1.1% to $162.20 after hours, although the company's adjusted per-share earnings and revenue beat expectations.

For the fiscal year ending in May of 2017, the Memphis, Tenn., company forecast adjusted per-share earnings of $11.75 to $12.25. Analysts polled by Thomson Reuters expected per-share profit of $12.05.

The company also said it is raising capital spending for the current fiscal year to $5.1 billion, up from $4.8 billion in the recently completed year. FedEx said the capital plan includes spending for the continued expansion of its ground operations and the modernization of its FedEx Express fleet, but doesn't include investments in its recently acquired TNT Express business.

For the period ended May 31, FedEx reported a loss of $70 million, or 26 cents a share, compared with a year-earlier loss of $895 million, or $3.16 a share. Excluding pension-accounting adjustments, TNT acquisition- and integration-related expenses and other items, adjusted per-share earnings rose to $3.30 from adjusted earnings of $2.66 a share. Revenue increased 7.4% to $13 billion.

Analysts polled by Thomson Reuters expected per-share profit of $3.28 and revenue of $12.78 billion.

FedEx said the latest period benefited from one additional operating day.

In FedEx's ground division, revenue climbed 20% to $4.29 billion as volume rose 10% and revenue per package increased 7%. Revenue per package benefited from price increases that were partly offset by lower fuel surcharges.

Despite higher operating costs and network expansion expenses, the FedEx ground segment posted operating earnings growth of 9% to $656 million.

The FedEx Express business recorded revenue of $6.72 billion, up slightly from $6.7 billion a year earlier. Adjusted operating earnings rose 27% to $757 million as operating margins strengthened.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

June 21, 2016 17:37 ET (21:37 GMT)

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