FedEx doubles profit but will cut jobs
Fiscal-first-quarter earnings rise 107%, but the shipping company will lay off 1,700 workers and close 100 facilities as it merges 2 freight divisions..
By Ted Reed, TheStreet
FedEx also said Thursday it will merge its freight and less-than-truckload freight operations, resulting in the loss of 1,700 jobs and the closure of 100 facilities.
Net income was $380 million, or $1.20 a share, in the fiscal first quarter, which ended Aug. 31. Analysts surveyed by Thomson Reuters had estimated $1.21. Revenue rose 18% to $9.5 billion; analysts had estimated $9.4 billion.
In the same period a year earlier, FedEx earned $181 million, or 58 cents a share. It had guided toward earnings of $1.05 to $1.25 a share.
"Strong demand for our services resulted in higher volumes and better revenue per shipment at FedEx Express and FedEx Ground," said CEO Fred Smith. "This increased demand comes from improved global economic conditions" and from the strength of the company's global network.
The company projected fiscal-second-quarter earnings of $1.15 to $1.35 a share. Analysts estimate $1.36. FedEx raised fiscal 2011 guidance to between $4.80 and $5.25 a share, while analysts were estimating $5.22.
Including one-time costs from a planned merger of FedEx Freight and FedEx National LTL operations effective Jan. 30, 2011, which was announced Thursday, earnings are expected to be between 97 cents and $1.21 in the second quarter and between $4.40 and $4.95 for the fiscal year.
The merger will cost an estimated $150 million to $200 million, charges that will be taken in the current quarter and the fiscal third quarter.
FedEx shares were trading 3.7% lower Thursday at $82.74.
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