No reason for optimism in FedEx's numbers
On September 17, the company expects to report earnings for the fiscal first quarter ended August 31, of 58 cents per share, down 53 percent from $1.23 per share a year ago. The company says that results for the second largest package delivery company will likely be better than its earlier guidance of 30 cents to 45 cents per share. But looking ahead, second quarter earnings, says Fedex, will likely be 65 cents per share to 95 cents per share, down substantially form $1.58 per share a year ago.
"FedEx first quarter financial performance exceeded our guidance thanks to better-than-expected FedEx International Priority volume, strict cost management and solid execution of our strategy," said Alan B. Graf, Jr., FedEx chief financial officer, in a statement. "Despite some encouraging signs in the global economy, it is difficult to predict the timing and pace of any economic recovery. "
So while the first quarter results may beat expectations, the company clearly sees some hurdles ahead. FedEx, like other transportation companies, currently needs to deal with oil prices of about $75 per barrel -- a high for the year. That could rise further: The International Energy Association expects oil demand to rise this year and next year as the economy begins to recover. Already, sales have taken a hit. Revenue per shipment declined year-over-year in each FedEx business unit as fuel charges increased significantly. The company "continues to face a very competitive pricing environment combined with significant overcapacity in the LTL freight market," Graf said.
FedEx's first quarter results seem to underscore the claims of many economists that good times are coming. But exactly how good these times will be remains to be seen.