UPDATE 2-FedEx cuts forecast as air freight weakness hits profit
* Q3 adjusted profit $1.23 misses estimates of $1.38
* FedEx to step-up cost-cutting, reduce international capacity
* Sees 2013 adjusted profit $6 to $6.20 per share
* Shares fall 3.8 percent
March 20 (Reuters) - FedEx Corp cut its full-year forecast after a worse-than-expected third-quarter profit as customers shift from air express to slower but cheaper modes of shipping.
Shares of the No. 2 U.S. package-delivery company fell 3.8 percent to $102.38 in premarket trading.
FedEx's express unit, its biggest source of revenue, has also been hit by overcapacity in the industry that has squeezed margins. Operating income in the express unit fell 66 percent.
"We remain focused on our strategic cost reduction programs, which are ramping up and on track," Chief Executive Fred Smith said in a statement.
FedEx announced a plan in October to improve profits by $1.7 billion over four years by cutting costs in the express unit.
Smith said on Wednesday the company would cut express capacity to and from Asia from April 1 and was looking at reducing its fleet by retiring more of its older, less-efficient aircraft.
The company said a number of its executives accepted voluntary buyouts in early February, and that it had notified thousands more of their eligibility for buyouts.
Rival United Parcel Service Inc in January forecast weaker-than-expected 2013 profit, citing an uneven global economy.
FedEx forecast fourth-quarter adjusted earnings of $1.90 to $2.10 per share. Analysts on average expect $2.07 per share.
The company now expects a profit of $6.00 to $6.20 per share for fiscal 2013 ending May 31. It had earlier forecast $6.20 to $6.60 per share. Analysts on average expect earnings of $6.31 per share, according to Thomson Reuters I/B/E/S.
Third-quarter net income fell 31 percent to $361 million, or $1.13 per share. Excluding items, FedEx earned $1.23 per share.
Revenue rose 4 percent to $11.0 billion. Analysts expected earnings of $1.38 per share on revenue of $10.85 billion.