FedEx yesterday warned its 2008/09 full-year profits would be significantly lower than originallyforecast and announced it would cut $500 million from its capital spending programme. Q2 profits,
however, will come in within the previous guidance range.The company, which will release full Q2 (September-November) results on December 18, said ina statement that it expects to report earnings of $1.58 per diluted share for the second quarterended November 30. Its previous earnings guidance for the quarter was $1.40 to $1.60 per dilutedshare.
For fiscal 2009, the company has reduced its earnings guidance to $3.50 to $4.75 per dilutedshare from the previous guidance of $4.75 to $5.25, as significantly weaker macro-economicconditions are expected to offset the benefits from lower fuel prices and the announced departureof DHL from the US domestic package market. The outlook assumes stable fuel prices.
“Second quarter results benefited from rapidly declining fuel prices and continued costmanagement,” said Alan B. Graf, Jr., executive vice president and chief financial officer.“However, demand for our services weakened sequentially throughout the quarter and global economictrends continue to worsen, substantially reducing our second half outlook. We are adjusting ourexpense plans to more closely align with the weaker business conditions, and are now targetingcapital spending of $2.5 billion for fiscal 2009, down from $3.0 billion at the start of the year.”
The announcement prompted a sharp fall of more than 10% in FedEx shares in after-hourstrading following the close of US stock markets. FedEx shares earlier officially closed up 0.98% at$74.43.
