FedEx Posts Lower Quarterly Profit, May Not Meet 2008 Target

Rick Bowmer

Paul Jespersen Chavez maneuvers his cart as he makes deliveries along his route in Portland, Ore.

FedEx said quarterly profit fell from a year earlier as the U.S. economy grew at a weaker pace than expected. And the package delivery company said its fiscal 2008 growth target may be in doubt.

FedEx said earnings fell to $1.35 a share for its fiscal third quarter, which ended in February, from $1.38 a share in the year-ago period. The profit includes 6 cents a share in charges, including those for fuel surcharges and storms, and a benefit of 8 cents a share for a reduction in the company's tax rate. On average, analysts surveyed by Thomson Financial predicted a profit of $1.33 a share.

Revenues rose 7% from the year-ago period to $8.6 billion, a bit shy of expectations for $8.7 billion.

In addition, the company's chief financial officer said the company may not achieve its 2008 long-term growth target of 10% to 15%.

"A lot will depend on whether the economy improves from where it is today," CFO Alan Graf said in a conference call with analysts, according to Reuters.

For its fiscal fourth quarter, the company predicted earnings of $1.93 to $2.08 a share, in line with expectations for a profit of $2.03 a share. But the company also said it expected 2007 fiscal full-year earnings per share in a range of $6.45 to $6.60, lower than expectations for earnings of $6.78 a share.