FedEx’s Profit Drops; Plans More Cost Cuts
FedEx Corp. said Thursday its fiscal third-quarter profit fell sharply from a year ago and that it plans to take cost-cutting measures including more job and pay reductions.
The company’s net income fell to $97 million, or 31 cents a share, from $393 million, or $1.26, a year ago. Revenue for the quarter ended Feb. 28 fell 14% to $8.14 billion.
The company will extend pay cuts to some non-U.S. workers and will cut an unspecified number of jobs, Bloomberg reported. The company said it will institute capacity reductions at its FedEx Express and FedEx Freight units.
FedEx said in February it would cut 900 jobs from the less-than-truckload FedEx Freight unit and said in December it cut its executives’ salaries and suspended matching company contributions to its employees’ 401(k) retirement plans.
The newly announced cuts will extend total expense savings to $1 billion in fiscal 2010 and will result in fourth-quarter charges of about $100 million, FedEx said.
FedEx Freight reported an operating loss of $59 million, down from operating income of $46 million a year ago, while revenue fell 21% to $914 million.
Operating income at the FedEx Ground segment rose 15% to $196 million, while revenue rose 4% to $1.79 billion
FedEx Express’ operating income plunged 89% to $45 million from a year ago, while revenue fell 18% to $5.05 billion. U.S. domestic package revenue fell 15%, led by a 12% drop in revenue per package due to lower fuel surcharges, weight per package and rate per pound.
FedEx Corp. is ranked No. 2 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.
