NEW YORK (AP) — FedEx, the world's second-largest package delivery company, posted a 12 percent decline in second-quarter profits Wednesday due to weakness in its air network and the impact of Superstorm Sandy.
The storm shaved 11 cents per share off of earnings for the quarter as shipping volumes fell and costs rose.
The company maintained its forecast for the full fiscal year ending in May, counting on a massive cost cutting plan to offset global economic weakness. Its forecast for the current quarter, which incorporates the critical holiday season, falls below Wall Street expectations.
FedEx Corp. posted earnings of $438 million, or $1.39 per share for the quarter that ending in November, compared with $497 million, or $1.57 per share, a year ago. That fell shy of the $1.41 per share that Wall Street was expecting, according to a poll of analysts by FactSet.
Revenue rose to $11.1 billion from $10.6 billion previously, as the company scaled back its operation to better match demand and some of its raised rates. Analysts forecast revenue of $10.84 billion.
Growth in the company's freight and ground operations boosted results, but FedEx reported "persistent weakness" in its core express network. Operating income in that segment fell 33 percent. FedEx and its larger rival UPS Inc. have both seen consumers and businesses opt for slower shipping options to cut costs.
FedEx said on Wednesday that it expects earnings will be between $1.25 and $1.45 per share in the third quarter. Analysts that follow the company were predicting per-share earnings of $1.45.
The company also said it expects to earn between $6.20 and $6.60 per share for the year ending in May, excluding any charges from the company's buyout plan. Wall Street is looking for $6.34.
Earlier this month FedEx said it will offer some employees up to two years pay to leave, starting next year. The voluntary program is part of an effort to cut annual costs by $1.7 billion within three years.
Shares of FedEx, based in Memphis, Tenn., rose slightly before the opening bell.