FedEx ups earnings guidance amid 'moderate recovery' in world economy

FedEx dramatically increased its earnings estimate for its fiscal first quarter ending Aug. 31, yesterday projecting earnings per share to be in the range of $1.05 to $1.15, up 19%-23.5% from its previous earnings guidance made just last month. If the projection comes to fruition, the express giant's quarterly per share profit will jump 81%-116% year-over-year. For the full fiscal year ending May 31, 2011, it projects earnings per share of $4.60-$5.20, up 4%-4.5% from its previous guidance. It said the new projections are based on "the current market outlook for fuel prices and a continued moderate recovery in the global economy."

Executive VP and CFO Alan Graf said, "Our revenue and earnings growth are exceeding original expectations, primarily due to better-than-expected growth in [the] FedEx Express [airline unit] and FedEx Ground volumes. Our package volume growth rates in our first quarter are continuing at a pace similar to our fourth quarter." The company reported net income for its fiscal year ended May 31 of $1.18 billion (ATW Daily News, June 17).

It said its air-reliant International Priority package and freight services have been a "particular benefit to our earnings." IP package volumes are projected to grow more than 20% year-over-year in the current fiscal quarter. It also said the improved outlook allows it "to fully restore" the company match for employee contributions to 401(k) retirement savings plans effective Jan. 1, 2011. The matching of 401(k) contributions was suspended Feb. 1, 2009.

FedEx's guidance upgrade came on the heels of rival UPS reporting an 89.9% year-over-year jump in its second-quarter net income and upping its full-year earnings estimate by 45%-50% (ATW Daily News, July 26).FedEx will release its fiscal first quarter results on Sept. 16.