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FedEx Profit Drops 75%, More Than Estimated

The FedEx Corporation said on Thursday that it was taking market share from competitors despite a recession that drove its profit down 75 percent.

The company also announced additional cost cuts, including reducing capacity at its FedEx Express and FedEx Freight units, and slashing personnel and work hours.

The company, based in Memphis, reported net income for its fiscal third quarter, which ended Feb. 28, of $97 million, or 31 cents a share, down from $393 million, or $1.26 a share, in the period a year earlier. Analysts had expected 46 cents a share, according to Reuters Estimates.

FedEx said third-quarter revenue fell 14 percent, to $8.14 billion, from $9.44 billion in the quarter a year ago.

“If this is what FedEx can do in really tough times, imagine what they can do when things bounce back,” said Sandeep Kar, a transportation analyst at the consulting company Frost & Sullivan. “They are going to emerge as a lean and mean company that will experience rapid growth.”

Like its main rival, United Parcel Service, FedEx is considered a bellwether of economic activity. When the economy does well, companies and consumers ship more goods; in a recession, package volumes drop.

For the current quarter, FedEx said it expected to earn 45 cents to 70 cents a share, below the average of 72 cents expected by analysts.

In December, the company said it had suspended matching contributions to its 401(k) retirement plan for a minimum of one year as of Feb. 1 and would impose pay cuts for all salaried personnel.

Package volumes at both FedEx and UPS have been hit by the downturn. The Deutsche Post unit DHL closed its American domestic service in January, citing the economic slump and its inability to compete in a market dominated by FedEx and UPS.

Shares of FedEx rose 4.76 percent, or $2.05, to $45.10.
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