MEMPHIS -- Income and revenue rose during the peak of the Christmas season at FedEx Corp., but higher fuel costs helped keep profit below Wall Street's forecast.
Christmas-season package volume was the heaviest ever, as the big package-delivery company continues to benefit from the growth in online shopping.
FedEx Corp. said Tuesday that it earned $562 million in its fiscal third quarter, up 11 percent from a year earlier, and revenue increased 19 percent.
Adjusted profit, which excludes costs related to the acquisition and restructuring of TNT Express, was $2.35 per share. That was well short of the $2.63 per share forecast by 11 analysts surveyed by Zacks Investment Research.
The company lowered its forecast of full-year earnings excluding pension-accounting changes. It now sees those earnings at between $10.80 and $11.30 per share, compared with a previous forecast of $10.95 to $11.45 per share. The forecast assumes "moderate" global economic growth.
Third-quarter revenue of $15 billion was slightly higher than the prediction of $14.96 billion by eight of the Zacks analysts.
The FedEx ground unit's operating income fell 8 percent in the third quarter on higher costs for labor and rent as it expanded operations to handle Christmas packages, FedEx said in a statement.
The Memphis-based company is adding capacity and automation at FedEx Ground so it can process more of the growing number of goods ordered over the Internet. Because those parcels generally aren't time sensitive and require more handling, they produce a smaller return than shipments between businesses.
The company took charges of 28 cents per share related to last year's acquisition of Dutch delivery service TNT Express. The company is trying to reduce costs and increase efficiency in the TNT business, and Chairman and Chief Executive Officer Fred Smith said that work was on schedule.
FedEx shares fell 43 cents to close at $191.84 in New York before the results were released. The shares rose 2 percent in extended trading.
The shares have risen 3 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed roughly 5 percent. They have gained 17 percent in the past 12 months.
Information for this article was contributed by Mary Schlangenstein of Bloomberg News.
Business on 03/22/2017