Oct 10 - FedEx plans to boost profits by $1.7 billion a year by the end of its 2016 fiscal year through cost cuts as it faces a tough global economy. Conway G. Gittens reports.
$1.7 billion: that's your daily digit for this Wednesday. This is how much FedEx plans to boost its profits each year by the end of fiscal 2016. The boost will come from shedding jobs, equipment, and assets at underperforming units like express air freight and services. Wall Street seems to love the plan, sending FedEx shares up by around five percent But delivering on that goal won't be easy. The No. 2 U.S. package shipper downgraded its forecasts for the global economy for the second time this year. And while cost cutting may help, demand may not. Last month, FedEx cut its profit forecast for next fiscal year, because corporate customers are switching to lower-cost shipping options, like shipping goods by sea rather than air. FedEx, a barometer of economic activity because of the broad range of goods it moves, sees U.S. economic growth at around two percent this and next year. But concerns about China and Europe linger.... Still, FedEx is pushing ahead with a $1.7 billion profit improvement plan. Conway Gittens, Reuters