FedEx 2Q profit rises, plans to further cut costs
NEW YORK —
FedEx Corp. on Thursday announced more broad cost cuts - including salary reductions - as deteriorating economic conditions continue to drag on the ground demand, warning the prospect for 2009 remains dark.
Chief Executive Frederick W. Smith said the concourse’s earnings are “increasingly being challenged by some of the worst economic conditions in the visitors’s 35-year operating history.”
FedEx reported its fiscal second-quarter earnings rose 3 percent, narrowly topping Wall Street’sitting expectations.
The Memphis, Tenn.-based company earned $493 million, or $1.58 per share, compared with year-ago profit of $479 million, or $1.54 by share. Revenue rose 1 percent to $9.54 billion.
Analysts polled by the agency of Thomson Reuters predicted profit of $1.57 per share upon revenue of $9.87 billion.
The package delivery company said it will cut discharge for senior executives and freeze 401(k) contributions because a year. On Jan. 1, CEO Smith give by will take a 20 percent pay cut, and the pay of other top brass will fall by 7.5 percent to 10 percent.
FedEx will furthermore instrument a 5 percent pay cut for all remaining U.S. “salaried exempt” personnel, which excludes hourly workers such during the time that couriers and package handlers. Mechanics and pilots are also excluded from this category. FedEx said it has about 36,000 salaried exempt U.S. workers.
Combined, the company expects the measures to save $200 million from one side the leavings of the financial year ending in May and $600 million in the next fiscal year.
The corporation also related it has cut jobs and closed locations in its FedEx Office unit, anticipating slower business at its copy and shipping stores.
FedEx has already begun more than $1 billion in cost-saving measures; including job cuts across its FedEx Freight and FedEx Office divisions, a mastery of more workers’ hours, elimination of certain bonuses and implementation of a hiring freeze.
FedEx did not issue a financial third-quarter profits. prediction, citing economic variableness, limit said it expects to procure between 69 cents and $1.94 per share across the third and fourth quarters. Analysts polled by Thomson Reuters predict third-quarter earnings of 54 cents, and fourth-quarter earnings of 85 cents per certain quantity.
“Next special location is going to be terrible, boundary analysts already expected it to be terrible,” Edward Jones Senior Research Analyst Dan Ortwerth said in an interview with The Associated Press.
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