FedEx lowers 4th quarter earnings guidance

FedEx Corp. on Friday lowered its earnings guidance for its fourth quarter due to the escalating price of oil and weak U.S. economy.

The Memphis, Tenn.-based company now expects its earnings for the three months ending May 31 to be in the range of $1.45 to $1.50 per diluted share, compared to the previous forecast of $1.60 to $1.80.

Since we provided earnings guidance for the fourth quarter in March when the crude oil price was slightly above $100 per barrel, our estimated fuel costs for the quarter have increased more than 7 percent, or $100 million from our previous estimate, and the weak economy has restrained demand for U.S. domestic express package and LTL (less-than-truckload) freight services, said Alan B. Graf Jr., FedEx Corp.'s executive vice president and chief financial officer. 

While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices. This revised outlook assumes no additional increases to the current fuel price environment and no further weakening of the economy.

Source: American Shipper