FedEx recovers in 3rd quarter

FEDEX  GROWTH

Global – FedEx said third quarter revenue and profits rose, a sign that growth in the US and Asia is slowly strengthening.

FedEx earned US$239 million from December to February, compared with US$97 million the same time a year earlier. Revenue also rose 7% to US$8.70 billion, exceeding Wall Street expectations.

The company believed results were boosted by higher shipping volume, particularly at its international express and ground units. The average daily volume in International Priority packages also grew by 18%, thanks to exports from Asia.

Dan Seiver, an economist with San Diego State University, said the US economy will continue to improve even as consumers are hesitant towards spending. While businesses will start to hire, most would not return to their pre-recession spending habits, predicted Seiver.

"The consumer is never going to come all the way back because consumption was just too big a section of (US growth) in the past," he said.

FedEx's fuel costs also grew by 27% to US$810 million in the quarter. To cut costs, the company said it will continue to invest in fuel-efficient aircraft like the Boeing 777 freighter.

FedEx employees are now eligible for merit raises and a company match on their 401(k) contributions, benefits which were frozen in December 2008. The company expects earnings per share of US$1.17 to US$1.37 in the fourth quarter, and the reinstatement of more employee compensation programmes will hit earnings during that period and in the next fiscal year beginning in June.

UPS, the world's largest shipping company, revealed last month that fourth-quarter earnings nearly tripled. However, its freight business transporting larger products like appliances and cars continued to make a loss.

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