An employee sorts packages before loading them onto delivery trucks at the FedEx Express Station in New York.Mark Lennihan
FedEx Corp. reported a quarterly profit on Wednesday that beat analyst expectations, but said costs would constrain its 2011 earnings, sending its shares down in premarket trading.
The company projected 2011 earnings per share in the range of $4.40 to $5.00.
"We expect the growth in earnings in fiscal 2011 to be constrained," chief financial officer Alan Graf Jr. said in a statement, citing increases in fixed pension and aircraft maintenance expenses, in addition to higher anticipated health care costs.
"The consensus is above the top end of that range," BB&T analyst Kevin Sterling said of the outlook. "So that tells you that estimates need to come down. What's constraining their earnings is their costs."
For the fourth quarter that ended May 31, Memphis-based FedEx posted earnings of $696-million, or $1.33 per share, compared with a year-earlier loss of $849-million, or $2.82 per share.
Analysts had expected earnings of $1.32 per share, according to Thomson Reuters I/B/E/S.
Revenue rose 20 per cent to $9.43-billion as the global economy continued to recover from the recent recession, sending package volumes higher.
"Resumed growth in industrial production and global trade is increasing demand for our transportation services," Mr. Graf said.
The company said it had earned 64 cents a share in the year-earlier period before charges, mainly to write down the value of its acquisitions of Kinko's Inc. and Watkins Motor Lines.
Shares of both FedEx and rival United Parcel Service Inc. are down about 10 per cent in the past six weeks, reflecting the broader market's recent slide on concerns that several European nations might default on their debt.