NEW YORK — In another sign of confidence in the global economy, FedEx Corp. on Monday raised its earnings outlook for the current quarter and full year.
The world’s second-largest package delivery company said an overall boom in air and truck shipments is being driven by its speedy international priority service, where it ships high value goods like computers, iPhones and ereaders. Shipments are particularly strong out of Asia. Besides gadgets, the company’s next largest international priority segments are electrical components like disk drives and flash memory,vehicle components, high-end luxury goods and drugs and medical supplies.
International priority shipments are expected to jump 20 percent this quarter - showing that customers are increasingly willing to pay more to get packages faster.
FedEx shares climbed $4.43, or 5.6 percent, to close at $83.39.
Because of its renewed optimism in its business, the Memphis, Tenn., company said it will fully reinstate the company match for 401(k) plans across the company on Jan. 1. FedEx rescinded the match when the economy was near its worst point, and said it would reinstate a 50 percent match for most U.S. employees late last year. The cost of this move is included in the company’s new earnings forecast.
The company, a bellwether for U.S. economic health, expects to earn between $1.05 and $1.25 per share for its first fiscal quarter that will end Aug. 31, up from 58 cents a share a year ago. The forecast is up from its previous guidance of 85 cents to $1.05 per diluted share. Analysts polled by ThomsonReuters, on average, expected earnings of $1.01 a share.
For the full fiscal year ending in May 2011, FedEx expects earnings per share of $4.60 to $5.20, up from its earlier guidance of $4.40 to $5 a share, reflecting the current market outlook for fuel prices and a continued moderate recovery in the global economy. Analysts expected earnings of $4.98 per share.
The company reported earnings of $3.76 per diluted share last year.
FedEx will release firstquarter results on Sept. 16.
The company said its volume growth rates are runningon pace with the fiscal fourth quarter that ended in May. In that three-month period, international priority average daily shipments grew by 23 percent. U.S. average daily volume was up just 1 percent. Average ground unit shipments rose 7 percent on higher volume between businesses.
FedEx’s forecast comes on the heels of several strong earnings reports from other major companies. FedEx’s larger rival UPS on Thursday expressed confidence that it will counter the “slow pace” of economic recovery in the U.S. through increased prices and strong international shipments.The Atlanta company raised its full-year outlook for the second time since January after reporting its earnings doubled for the quarter that ended in June.
Business, Pages 19 on 07/27/2010