FedEx Trims Income In Third Quarter
Despite falling revenue and operating expenses that amounted to an increasing percentage of its revenue base, FedEx Corp. managed to remain profitable during its third quarter.
For the quarter, it generated net income of $97 million on revenue of $8.14 billion, compared with net income of $393 million on revenue of $9.35 billion. The third quarter ended Feb.28.
The company attributed the drop in its operating results to lower shipment volumes and FedEx Express and Fedex Freight, as well as reductions in fuel surcharges and lower shipment weights. All in all, U.S. domestic package volume dropped 3%. FedEx International Priority package volume fell 13%, with the declines coming in all regions.
Despite carrier DHL exiting the U.S. domestic package business, the additional business FedEx gained only partly offset its domestic losses.
There is some good news. FedEx Ground service package volume grew 2%, primarily due to growth in the company’s FedEx Home Delivery service.
The company is implementing a variety of cost-reduction actions, including cutting personnel and work-force hours; capacity reductions and Fedex Express and FedEx Freight and technology streamlining. The company anticipates taking $100 million in charges related to these actions during the fourth quarter, but expects they will net $1 billion in expense reduction during fiscal 2010.
The Cynic’s Take: One wonders whether the boost to Fedex’s Home Delivery service will continue as more workers become home-based “consultants,” voluntarily or otherwise…
