FDX 2009 Q3 Earnings - by BetterTrades

Early Thursday morning, the largest package delivery company, FedEx Corp. (FDX) made it known that the company’s 3Q earnings plummeted more than 75% during the period, as the global pinch took its toll on the company’s bottom-line.

For the recent period, FedEx recorded a profit of $97M, or $0.31 per share, versus a profit of $393M, or $1.26 per share. Overall results were affected greatly by lower shipping volumes and a more competitive pricing environment due to the economic turmoil.

Quarterly revenues declined for the company, falling from $9.44B to $8.14B, a decrease in sales of nearly 14%. As for operating income, FedEx saw a massive drop as well, falling from $641M a year ago, to $182M, a decline of more than 71%.

"Our financial performance was sharply lower during the quarter due to the global recession," stated Chairman, President and CEO Frederick W. Smith. "While we are gaining market share in all of our transportation segments, the downturn in our industry and the severity and expected duration of the recession require that we take additional actions."

Analysts, on average, were looking for FedEx to post quarterly earnings of $0.46 per share on overall revenues of $8.65B.

As the dire economic conditions continue to inflict havoc throughout the global economy, FedEx stated that they would be implementing additional cost cutting procedures in both domestic and international markets.

FedEx plans to reduce their workforce in order to save money, yet did not reveal the actual number of jobs being lost. Additional actions include scaling back workers’ hours and wages, while decreasing the capacity of loads on truck and airfreight. The company anticipates saving upwards of $1B in the next fiscal year. However, FedEx also stated that due to the cost reduction plan, the company could incur a charge of $100M in the upcoming 4Q.

Last December, the company suspended matching contributions to its 401k program for a minimum of one year, while cutting pay for salaried positions as well. Other initiatives included a 20% cut in the CEO’s pay, a 7.5% - 10% cut in other senior executives’ pay, and a 5% reduction in salaried positions.

"Our goal when we implemented compensation reductions in January for U.S. salaried personnel was to both protect our business and minimize the loss of jobs," Smith added. "With industrial production and global trade trends worsening since last quarter, we are applying these additional measures to continue to secure as many of our jobs as possible during this downturn.”

Looking ahead to the company’s upcoming 4Q, FedEx is predicting quarterly earnings to range between n $0.45 and $0.70 per share, excluding any one-time charges. A year ago, FedEx posted 4Q earnings of $1.45 per share after a one-time charge of $696M, which would have boosted earnings up to $2.22 per share.

On a GAAP basis, FedEx is forecasting 4Q earnings between $0.25 and $0.50 per share, which is compared to last year’s earnings of $0.78 per share. The company did not offer any guidance for upcoming revenues in the 4Q. However, analysts are looking for the package delivery company to post 4Q earnings of $0.72 per share.

Despite the horrendous earnings report, shares of FDX surged in trading on Thursday, gaining nearly 5%, or $2.05, to end the session at $45.10 per share. During the past year, shares of FedEx had traded in a range between $34.02 and $99.46 per share.

By BetterTrades