FedEx profit rises 14%, still lower than expected

FedEx Corp. is one of the largest global shipping companies, and provides a portfolio of transportation, e-commerce and business services through its subsidiaries. The fiscal second-quarter of FedEx Corp. is reported to rose 14%, although it missed the analysts market estimates. The ground shipping revenue rose, but its express-shipping one decreased right in the critical holiday seasons eve.

The entire shipping industry has been facing some difficulties thanks to a change in client spending. More and more customers start looking for cheaper and slower delivery options, substituting air delivery service with ground ones. The executives of the company commented that this change in customers taste many not be a short-term trend but a long-term one, because of the customers attempts to cut their costs amid a small economic recovery.

FedExs response to customers demand was an overhaul in its delivery options and pricing plans. The company raised the prices of its largest business – domestic express-shipping. It reported a profit of 500 million dollars for the quarter that ended on November the 30th this year. The earnings of the company rose to 11.4 billion dollars, which is 2.7% up.

The express-shipping business is considered FedEx Corp.s largest business, which respectively brings a great part of its revenue. Revenue was 0.2% down, decreasing to 6.84 billion dollars due to lower express freight revenue and lower fuel surcharges. The overall operating profit of the segment was 42% up. The company considered the lower pension expense and lower net expenses, as well as the higher base package yields as the reasons for the increase. The domestic average daily package volume in the U.S. recorded a slight decrease, and the international priority volume was 5% down.

FedEx managed to boost its annual adjusted earning guidance. The company announced to expect 8% to 14% per-share growth, from its prior view of 7% to 13% growth. According to information provided by Wall Street Journal, the ground-shipping segment recorded a revenue, which is 10% higher. There is also 8% growth in average daily volume and higher revenue per package. The operating profit rose 3%.

According to CNN Money, the current share price of FedEx Corp. is 0.54% down, and its one-year return rate is 51.65% up. The 22 analysts offering 12-month price forecasts for FedEx Corp. have a median target of 136.50, with a high estimate of 162.00 and a low estimate of 105.00. The median estimate represents a 1.86% decrease from the last price of 139.09.

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