Package delivery giant FedEx Corp. (FDX) on Thursday reported a profit for the third quarter that more than doubled from last year, boosted by higher yields and record holiday package shipping.
Earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates.
Looking ahead, the company expects higher earnings for the fourth quarter, in line with analysts estimates, and narrowed its earnings outlook for fiscal 2012.
The performance of package delivery companies like FedEx and its rival United Parcel Service, Inc. (UPS) are generally considered a strong barometer of overall consumer attitude and business confidence due to the large number of shipments they handle for consumers worldwide.
Frederick Smith, chairman, president and chief executive officer of FedEx said, "FedEx Corp. results were driven by improving yields, record holiday package shipping and exceptional performance at FedEx Ground. We expect our solid performance to continue in our fourth quarter, capping off a strong fiscal year."
Revenues at the FedEx Express segment, the company's largest by revenue, climbed 8 percent from last year. Operating income rose 96 percent.
Revenues at the FedEx Ground segment increased 14 percent, while operating income surged 43 percent. FedEx Freight segment reported a 10 percent increase in revenues. The segment's operating loss narrowed from last year.
FedEx's third-quarter net income rose to $521 million or $1.65 per share from $231 million or $0.73 per share in the prior-year period.
The latest quarter's results include a $0.10 per share reversal of a reserve associated with a legal matter at FedEx Express. The prior-year results include $0.08 per share in costs related to the combination of the company's FedEx Freight and FedEx National LTL operations.
Adjusted earnings per share increased to $1.55 from $0.81 in the same period last year. On average, 23 analysts polled by Thomson Reuters expected earnings of $1.35 per share. Analysts' estimates typically exclude special items.
Revenues for the quarter grew 9 percent to $10.56 billion from $9.66 billion in the prior-year period, but missed analysts' consensus of $10.62 billion.
Looking ahead to the fourth quarter, FedEx projects earnings in a range of $1.75 to $2.00 per share. Analysts expect the company to earn $1.98 per share.
For fiscal year 2012, FedEx now forecasts adjusted earnings of $6.35 to $6.60 per share. The guidance assumes the current market outlook for fuel prices and moderate growth in the global economy.
Including the FedEx Express legal reserve reversal, the company forecasts earnings of $6.43 to $6.68 per share.
Earlier, FedEx projected earnings of $6.25 to $6.75 per share for the year. Analysts expect the company to earn $6.36 per share.
Earlier this week, United Parcel Service announced a deal to buy Dutch rival TNT Express NV (TNTEF.PK, TNTEY.PK) for about 5.16 billion euros or $6.77 billion, giving it an edge over FedEx in Europe.
FDX closed Wednesday's trading at $95.82. In Thursday's pre-market, the stock is down $1.62 or 1.69 percent to $94.20.
by RTT Staff Writer
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