FedEx Corp on Tuesday dropped the most in more than five years after increased labor costs and a bumpy integration effort for the company’s TNT Express acquisition weighed on profit.
The weak performance got FedEx off to a “messy start” in its new fiscal year, Morgan Stanley said in a note to clients, but FedEx is betting on a rebound, raising its full-year earnings target by US$0.20 a share to as much as US$17.80.
That puts pressure on the company to perform much better in the holiday season and the rest of its fiscal year ending on May 31 next year.
“The end result is that the guide is even more back-half loaded and highly dependent on the successful capture of expected TNT synergies and improved revenue mix at TNT,” Stephens Inc analyst Jack Atkins said in a note on Tuesday.
FedEx fell 5.5 percent to US$241.58 at the close in New York, the biggest one-day drop since March 2013.
The shares have dropped 3.2 percent this year through Tuesday, while the Standard & Poor’s 500 Index has gained 8.6 percent.
Increased compensation reduced earnings by US$170 million, or US$0.48 per share, during the fiscal first quarter, dragging results below analysts’ estimates.
The courier is also struggling to boost profit at TNT, a European operation that FedEx bought in 2016 for US$4.8 billion. The unit last year suffered a cyberattack that drove away customers and increased costs.
Salaries and benefits jumped 11 percent in the quarter and are to show large gains in the fiscal second quarter because, with the US corporate tax cut, FedEx decided to accelerate wage increases to April next year instead of October, said Helane Becker, an analyst with Cowen & Co.
FedEx also faced fuel costs that rose 40 percent, she said.
“You have very tough year-over-year comps in that line item for six months,” Becker said in an interview with Bloomberg TV.
Later this year, “the numbers won’t look so huge,” she added.
Earnings climbed to US$3.46 a share in the first quarter, trailing the average of analysts’ estimates by US$0.34. Sales of US$17.1 billion outpaced expectations of US$16.9 billion.
For the full fiscal year, earnings are to be US$17.20 to US$17.80, FedEx said.
Cairo’s new monorail slices across the city skyline, running above the familiar chaos of blaring horns and aging buses’ exhaust fumes that mark rush hour below. The US$4.5 billion monorail, opened this month, is among Egypt’s most prominent new transport projects, part of a debt-funded infrastructure drive criticized for sapping state finances while bringing limited benefits to most of the country’s 109 million people. “It feels like you’re in a different country,” said Ramy Sayed, a restaurant manager, aboard a driverless Innovia 300 train. “No noise, no traffic, we’re not used to this.” The eastern line runs 56km from the bustling middle-class
Starlux Airlines Co (星宇航空) today unveiled a long-haul network expansion plan at a shareholders’ meeting in Taipei, including direct flights to Barcelona, Spain, and Zurich, Switzerland, as well as a service connecting Taipei, Sydney and New Zealand. Starlux is to become the first Taiwanese carrier to offer non-stop services to the two European cities, while the inaugural oceanic route is expected to expand transit opportunities within the Australia-New Zealand market, Starlux said. Flight services to Chicago, Dallas, Washington and New York are under evaluation, the airline added. Prior to the shareholders’ meeting, the airline earlier this year announced that it would be
Taiwanese prosecutors suspect that three people successfully smuggled at least one shipment of Nvidia Corp artificial intelligence (AI) chips to China after first exporting them to Japan, people familiar with the matter said. The trio was detained last week by the Keelung District Prosecutors’ Office for allegedly falsifying documents related to exports of Super Micro Computer Inc servers containing advanced Nvidia chips, which the US has barred from sale to China without a license from Washington. The move marked Taiwan’s first public crackdown on AI chip diversion after years of pressure from the US to take a more active role in curtailing
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) employee bonuses are likely to grow more than 30 percent this year, in line with the past few years as the company’s profits continue to set new records, an anonymous source cited TSMC chairman C.C. Wei (魏哲家) as saying yesterday. TSMC, the world’s largest contract chipmaker, is committed to taking care of its workers, the source said, citing Wei’s meeting with employees yesterday morning. Wei also expressed gratitude to employees for their contribution to the company’s improving bottom line, the source added. Since 2023, TSMC’s employee bonuses have grown at an annual rate of
RSS