FedEx Corp.'s Volumes, Earnings Down

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FedEx Corp. said yesterday that earnings for the fiscal 2001 fourth quarter are expected to be 50 cents to 60 cents per share, compared with 85 cents per share in the year-ago period.

The fourth quarter will end May 31.

"Deteriorating economic conditions and the rapid decline in the hi-tech and other durable goods industries have increasingly affected FedEx Express volumes," said Alan B. Graf Jr., executive vice president and chief financial officer at FedEx, Memphis, TN.

Graf said that in April, U.S. domestic average daily volume at FedEx Express declined 9 percent year-over-year. The growth rate of FedEx International Priority shipments slowed to 1 percent year-over-year, he said.

Graf said FedEx Ground package volume grew about 5 percent, while package yields at both FedEx Express and FedEx Ground continue to show solid growth.

"We expect the economic softness to continue into our fiscal 2002, which begins June 1, 2001," Graf said. "Although we are taking steps to substantially reduce expense and capital spending, we nonetheless expect our first-quarter earnings will be significantly below last year's 85 cents per share."

Analysts said this is bad news for delivery companies in general --including FedEx's main competitor, United Parcel Service -- and ultimately for mailers, especially if prices go up as a result.

"Clearly, further weakening in domestic express and international volumes is not a good sign for UPS as well," said Ed Wolfe, a transportation analyst at Bear, Stearns & Co. "We also continue to believe that negative volumes will lead to pressure on pricing a few quarters out if it persists."

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