FedEx Profit, Revenue Miss Estimates

By Chelsey Dulaney 

FedEx Corp. reported slightly weaker-than-expected revenue and adjusted profit in its May quarter, as the shipping giant was hurt by currency impacts and lower fuel surcharges.

Shares of FedEx, up 5% this year, edged down 1.2% in premarket trading.

In March, the company had warned that the strong dollar and higher fuel costs could hamper results for the quarter. Its results lately have been helped by restructuring at its largest segment, air express, where it has bought out thousands of employees and modernized its air fleet. The company has also benefited from lower fuel costs.

Overall for the fourth quarter ended May 31, FedEx posted a loss of $895 million, or $3.16 a share, compared with a profit of $780 million, or $2.62 a share, in the year-earlier period.

The bottom line in the latest quarter was dragged down by heavy special charges. FedEx said last week that it would book a $2.2 billion pretax charge in the quarter as a result of its decision to switch to a pension accounting method that it said makes it easier to gauge plan performance.

It also booked a charge of 47 cents a share in the quarter related to a $228 million settlement in a long-running independent contractor lawsuit. FedEx has tussled for years over its practice of classifying its U.S. delivery drivers as independent contractors.

Excluding the charges, earnings were $2.66 a share.

Revenue edged up 2.5% to 12.1 billion.

Analysts polled by Thomson Reuters recently expected per-share earnings of $2.68 on revenue of $12.3 billion.

For its newly-started fiscal year, FedEx projected per-share earnings of $10.60 to $11.10, while analysts' had forecast $10.88 a share, according to Thomson Reuters.

FedEx also said it has raised the mandatory retirement age for its board from 72 to 75, effective immediately.

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