March 19 - Winter storms were so severe and so frequent that FedEx slashed its profit forecast for the entire year. Fred Katayama reports.
The massive winter storms and freezing temperatures that crippled transportation slammed FedEx. The weather robbed it of $125 million in operating profit, pushing down shipping volumes and pushing up costs. Bad weather often hurts third quarter earnings, but the storms this time were so severe and so frequent that FedEx slashed its profit forecast for the entire year. And it's cutting its spending plans. FedEx has been cutting costs by buying more fuel efficient vehicles, but the storms buried those gains. And while international operations were less affected by weather, unfavorable exchange rates bit into results. Positive signs were few. Its ground shipping operations gained market share as archrival UPS experienced even more service issues during the busy holiday season. Buckingham Research analyst Jeffrey Kauffman said, "The weather took a bigger bite out of operations than we expected, and there were currency impacts we still don't yet know, but the FedEx restructuring story remains on track, but we believe expectations may have gotten ahead of themselves." FedEx stock, flat at the market open, has underperformed this year, down nearly 4 percent while transportation stocks have risen nearly 3 percent.