Weather and fuel prices impact on FedEx earnings
FedEx Corporation has confirmed that its financial results have been affected by the weather in the US and Europe, and by higher fuel prices. The company revealed a 12% growth rate for its revenues as it reported its second quarter results back in December, stating that it was enjoying solid demand for its services in a growing global economy.
However, FedEx had based guidance for investors on continued growth and stable fuel prices.
It said today that severe winter storms and higher-than-planned fuel prices have affected its third quarter outlook, for which results are to be reported next month.
Loss of revenue and increased expenses should see around $0.25 per diluted share knocked off expected earnings, with FedEx now forecasting as-adjusted earnings of $0.70 to $0.90 per share for the quarter ending February 28.
The new guidance assumes no further weather impacts, and stable fuel prices for the rest of this month, FedEx added.
December saw one of the coldest winters since records began in Europe, while the United States was hit by a major winter storm at the end of January that saw more than 20 inches of snow falling in some Midwestern states and up to 10 inches in East Coast states in just a few days.
Alan B. Graf Jr., executive vice president and chief financial officer at FedEx Corporation, said: “We experienced significant network disruptions in the US and Europe and unusually high costs from severe winter storms. In addition, fuel prices continued to escalate since we provided our earnings outlook in December.
“We continue to see strength in our base business across all transportation segments and geographies. I would like to take this opportunity to thank all our team members for their hard work and dedication during the recent severe weather events,” Mr Graf added.
FedEx has annual revenues of around $37bn.
Its shipping rivals in Europe and America have similarly been affected by the weather this winter, which has dampened some otherwise good growth signals.
UPS warned its investors earlier this month that the weather disruptions could impact on its results, after posting an 8.4% revenue growth for its latest quarter.
TNT, which was also hit by industrial action, issued a profit warning earlier this month, partly as a result of bad weather in Europe.
