Retirement Program Drains Q2 Profits at FedEx
Profit for the quarter, which ended Nov. 30, was $91 million, down from $245 million last year. FedEx reported revenue for the quarter of $5.9 billion, up from $5.7 billion last year.
Excluding the business realignment costs from the early retirement and voluntary severance program, most of which were taken during the quarter, earnings totaled $266 million.
The retirement and severance programs are expected to produce savings of $135 million to $145 million for the fiscal year, mainly in the second half, the company said.
About 3,600 employees accepted offers under these programs, and the response exceeded the company's expectations, FedEx said.
The company also said replacement management and staff will be needed and that some departures have been delayed until May 31, 2004. In addition, certain management positions were eliminated at FedEx Express and other business units based on the anticipated staff reductions from the voluntary programs and other cost-reduction initiatives.