FedEx 2Q profit up 14 pct but misses estimates as shippers choose cheaper ground options
MINNEAPOLIS (AP) -- FedEx's second-quarter profit missed analyst expectations as customers continued to shift toward cheaper ground-shipping options and away from overnight air.
The shipping company's net income rose 14 percent, in large part because Superstorm Sandy hurt business a year earlier.
FedEx earned $500 million, or $1.57 per share, for the quarter that ended Nov. 30. Analysts had been expecting $1.64 per share.
A year earlier it earned $438 million, or $1.39 per share. It said Superstorm Sandy hurt last year's profit by 11 cents per share.
Revenue rose 3 percent to $11.4 billion, which was slightly less than analysts were expecting. Revenue a year earlier was $11.11 billion.
Shipping companies have been dealing with a slow-growth economy, and FedEx has seen some customers shift toward slower, cheaper ground options instead of overnight.
Revenue and U.S. volume both fell slightly in FedEx's express unit, which handles overnight shipments and is the company's largest division. Ground shipping revenue rose 10 percent, and freight revenue was up 4 percent.
Rate increases helped to offset lower fuel surcharges, and cost-cutting caused Express operating profits to rise.
FedEx also noted that shipments for online orders after Thanksgiving will fall into this year's third quarter, instead of the second quarter.
FedEx raised its full-year profit outlook slightly, saying it now expects net income to rise 8 percent to 13 percent, one percentage point more than it previously expected. That would work out to $6.73 to $7.10 per share. Analysts were expecting $7.04 per share.
Shares of Memphis, Tenn.-based FedEx Corp. fell 11 cents to $138.98 in premarket trading.