Chicago: Package delivery giant and US economic bellwether FedEx Corp reported a 53% drop in quarterly profit on Thursday as the worldwide economic downturn continued to weigh on shipping volumes.
The company reported a profit of $181 million, or 58 cents a share, for the first quarter that ended on 31August , down from $384 million, or $1.23 a share, a year earlier.
Revenue fell 20% to $8.01 billion.
The results were better than Wall Street had expected for much of the past quarter, but were not a surprise.
Last week, the Memphis, Tennessee-based company preannounced its results, saying it would report first-quarter earnings of 58 cents a share and second-quarter earnings in a range of 65 cents to 95 cents — an outlook it reiterated on Thursday. At the time, the company said it was benefiting from an increase in international priority shipments and strict cost controls.
Before the preannouncement, analysts had expected FedEx to report earnings of 43 cents a share for the first quarter and 70 cents for the second quarter.
In Thursday’s announcement, the company warned that conditions remained challenging.
“While we see signs of improvement in the economy, the year-over-year comparisons will remain very difficult for our second quarter,” said chief financial officer Alan Graf Jr.
FedEx shares fell 1.5% to $77.00 in trading before the market opened.
Lower energy prices also weighed on the company’s numbers, resulting in what FedEx characterized as a “substantial decline” in fuel surcharges.
FedEx also said it planned to increase US shipping rates by an average of 5.9%for US domestic and US export services, effective 4 January. It said those increases would help offset the continued decline in fuel surcharges.