Fedex reports lower earnings in second quarter
FedEx Corp.’s second-quarter profits fell 63 percent from last year because of the costs of a previously announced early retirement and voluntary severance program. Its results missed Wall Street expectations and its shares fell more than 4 percent.
The package delivery company reported Wednesday profits of $91 million, or 30 cents per share, for the quarter that ended Nov. 30, down from $245 million, or 81 cents a share, for the same period last year.
Excluding the business realignment costs, most of which were taken during the quarter, the earnings totaled $266 million, or 87 cents per share. That fell short of the 90 cents forecast by analysts surveyed by Thomson First Call.
In early trading on the New York Stock Exchange, FedEx shares dropped $3.36, or 4.5 percent, to $70.95.
The early retirement and voluntary severance programs are expected to produce savings of $135 million to $145 million for the fiscal year, primarily in the second half, FedEx said.
“Approximately 3,600 employees accepted offers under these programs. This response substantially exceeded the company’s expectations,” FedEx said in a statement. The company said replacement management and staff will be needed and some departures have been delayed until May 31, 2004.
“Also, certain management positions were eliminated at FedEx Express and other business units based on the anticipated staff reductions from the voluntary programs and other cost reduction initiatives,” the company said.
FedEx reported revenues for the quarter of $5.9 billion, up from $5.7 billion last year.
“There was clear improvement in the (FedEx) Express cost structure this quarter, as evidenced by the higher operating income and margin before business realignment costs,” said chief financial officer Alan B. Graf Jr. “We expect FedEx Corp. earnings per share for the fiscal second half to be substantially higher than last year’s second half.”
For the first half of this fiscal year, FedEx earned $216 million, or 72 cents a share, down from $403 million, or $1.33 a share, a year ago. Six-month revenue rose to $11.6 billion from $11.1 billion a year ago.
Copyright © 2003 The Associated Press
