FedEx Corp. (FDX) said fiscal first-quarter earnings will exceed
its previously dour expectations and projected a profit this
quarter largely above analysts' estimates as the company benefits
from improvement internationally and cost controls.
Shares rose 4.8% premarket to $76.11.
The company has been pressured during the recession as shipping
volumes have fallen, more than offsetting benefits from falling
fuel costs. FedEx - considered an economic bellwether - in June
projected earnings of 30 cents to 45 cents, far below analysts'
then-average estimate of 68 cents.
But the company said Friday that earnings should come in at 58
cents when it fiscal first-quarter results on Wednesday. In part,
Chief Financial Officer Alan B. Graf credited better-than-expected
volume in FedEx's international priority-delivery service.
He added that despite "encouraging signs" in the global economy,
"it is difficult to predict the timing and pace of any economic
recovery."
Still, FedEx projected earnings for the current quarter of 65
cents to 95 cents. Analysts were predicting 70 cents.
In the first quarter, revenue per shipment declined across the
company amid lower fuel surcharges. Graf added, "We continue to
face a very competitive pricing environment combined with
significant overcapacity" in the less-than-truckload freight
market.
Separately, FedEx disclosed an Internal Revenue Service audit
team plans to assess taxes and penalties of $14 million related to
employment and withholding taxes in 2002. The company plans to
"contest the erroneous conclusions' in the audit.
It added the IRS is looking at similar issues for 2004 through
2008.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com