Fedex announces the quarter earnings are down 75 percent

Filed in archive News on March 22, 2009

Economic downturn has had a dramatic effect on the transportation sector, especially the sales of logistics service provider as there is less freight to be relocated. The new quarterly earnings of Fedex is one evidence of this:

Net income for the Memphis-based company was down sharply at $97 million, a 75 percent decline from $393 million during the same timeframe a year ago. Earnings per share at $0.31 fell short of last year's $1.26. And quarterly revenue of $8.14 billion dropped 14 percent to $8.14 billion-compared to $9.44 billion a year ago, while the quarterly operating income of $182 million sank 72 percent compared to last year's $641 million. The company's operating margin at 2.2 percent was off by 4.6 percent compared to last year's 6.8 percent.

"Our financial performance was sharply lower during the quarter due to the global recession," said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer, in a statement. "While we are gaining market share in all of our transportation segments, the downturn in our industry and the severity and expected duration of the recession require that we take additional actions."

According to Logistics Management Magazine, FedEx said it is rolling out the following domestic and global cost-cutting measures, which it expects to reduce expenses by roughly $1.0 billion for Fiscal 2010:

- Network capacity reductions at FedEx Express and FedEx Freight;
- Further reduction of personnel and work hours;
- Expansion of previously announced pay actions to include non-U.S. employees, where permitted;
- Additional reductions in other spending categories; and increased economies in the acquisition of goods and services