Analysts respond to FedEx results

In its statement on the results for the first quarter (Q1) of fiscal year 2016 issued earlier today, FedEx reported a 6% increase in profits compared to a year earlier and an increase in revenue to $12.3bn from $11.7bn – but these figures missed analysts’ estimates and also prompted the company to lower its forecasts. As Alan B. Graf, Jr., FedEx’s executive vice president and chief financial officer, conceded: “Our new fiscal 2016 outlook is modestly lower than our initial forecast due primarily to weaker LTL industry demand and higher than expected self-insurance reserves and operating costs at FedEx Ground.”

Commenting on the results, Fiona Cincotta, a senior market analyst at www.finspreads.com, spoke for many when she told Post&Parcel: “Missing expectations and lowering the full year earnings forecast is never a good place to be for a company and as a result FedEx suffered at the hands of investors with shares dropping almost 3% in pre market trading.

“There is work to be done here and the increase in some rates announced yesterday by the firm show that they are taking steps to rectify the problem. However, with demand expected to be weak going forward FedEx must be wary of pushing business to competition in an increasingly tough trading environment.”