FedEx Posts Lower-Than-Expected Third Quarter

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FedEx Corp.'s earnings were down for the third quarter compared with the year-ago period, the company said yesterday.


It attributed the downturn to the slowing economy.


During the third quarter, which ended Feb. 28, FedEx reported a net income of $109 million, down 4 percent from $113 million in the year-ago quarter. In addition, operating income was $191 million, down 7 percent from $206 million a year ago. Revenue, however, was $4.8 billion, up 7 percent from $4.5 billion the previous year.


"Our third quarter was challenging, as economic conditions worsened throughout the quarter," said Alan B. Graf Jr., executive vice president and chief financial officer at FedEx, Memphis, TN. "As we indicated in December, our original forecast for the third and fourth quarters assumed a soft economic landing.


"However, market conditions have deteriorated more than we anticipated, as reflected by numerous news accounts of earnings warnings and layoffs, particularly in the auto and high-tech sectors. Volume growth, yield growth and weights for February dropped noticeably for all of our operating units."


Graf said FedEx International Priority shipments continued to be the fastest-growing portion of the business, with IP volume increasing 7 percent and IP yield improving 3 percent in the third quarter compared with the year-ago period. However, he said this is below recent growth rates.


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