Tag: USA

FedEx warned yesterday that first-quarter earnings would be affected by high fuel prices and intense competition, after increasing net profits by 9 per cent in the fourth quarter. The cautious guidance appeared to signal a slowdown in the package delivery company’s momentum, after several consecutive quarters as the industry’s star performer. Michael Glenn, vice-president of market development, conceded that the industry was becoming more competitive but insisted pricing remained “rational”. United Parcel Service, which had been losing market share to FedEx, has fought back strongly from a weak 2004 and German-owned DHL is expanding in North America. James Valentine, analyst at Morgan Stanley, said FedEx’s comments brought confirmation that FedEx and UPS were “using price more aggressively”. But he dismissed fears that the market was descending into a destructive price war.

FedEx reported a 9 percent increase in fourth-quarter earnings Thursday, but startup cost for a new westbound around-the-world flight played into keeping results below Wall Street expectations. FedEx reported earnings of USD448 million, or USD1.46 per share, up from USD412 million, or USD1.36 per share, for the same quarter last year. Revenues were USD7.72 billion, up from USD7.04 billion. Improvements in its international priority business have played a major role in earnings increases for the package delivery company for several years, and the company said it expects to add more flights abroad for its cargo airline, FedEx Express. “Because these routes take anywhere from 24 to 36 months to become profitable, we think now is the time to start them,” said chief financial officer Alan Graf. “Having said that, once they reach profitability, these provide high, double-digit returns for the foreseeable future and will be very lucrative.”