Profit soared amid lower fuel costs at the world's largest express delivery company, but maintenance expenses shaved income. Fred Katayama reports.
FedEx delivered more packages in the latest quarter. That, plus lower fuel costs, helped boost profit 23 percent. But profitability at its ground segment shrank, and an increase in aircraft maintenance expenses shaved income, resulting in profit that missed analysts' forecasts. The world's largest express delivery company reaffirmed its full-year forecast, but that, too was less than expected. FedEx shares, which had been vastly outperforming rival UPS and the overall market, dropped in early trading. RBC Capital analyst John Barnes said, "We believe the below-consensus result and lack of a guidance raise is likely to disappoint many investors, especially given the strong stock performance over the past few months." The report comes towards the end of the peak holiday shipping season. So far, the delivery companies have escaped the bad weather that slammed results last year. And the steep fall in fuel prices has yielded what FedEx called a "slightly positive net impact." FedEx, stung by a surge in last-minute online orders this time last year, is bolstering its e-commerce business. This week, it bought the logistics firm, Genco, and a company that helps online retailers process international shipments, Bongo International.