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.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
‘IMMENSE SWAY’: The top 50 companies, based on market cap, shape everything from technology to consumer trends, advisory firm Visual Capitalist said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was ranked the 10th-most valuable company globally this year, market information advisory firm Visual Capitalist said. TSMC sat on a market cap of about US$915 billion as of Monday last week, making it the 10th-most valuable company in the world and No. 1 in Asia, the publisher said in its “50 Most Valuable Companies in the World” list. Visual Capitalist described TSMC as the world’s largest dedicated semiconductor foundry operator that rolls out chips for major tech names such as US consumer electronics brand Apple Inc, and artificial intelligence (AI) chip designers Nvidia Corp and Advanced
Pegatron Corp (和碩), an iPhone assembler for Apple Inc, is to spend NT$5.64 billion (US$186.82 million) to acquire HTC Corp’s (宏達電) factories in Taoyuan and invest NT$578.57 million in its India subsidiary to expand manufacturing capacity, after its board approved the plans on Wednesday. The Taoyuan factories would expand production of consumer electronics, and communication and computing devices, while the India investment would boost production of communications devices and possibly automotive electronics later, a Pegatron official told the Taipei Times by telephone yesterday. Pegatron expects to complete the Taoyuan factory transaction in the third quarter, said the official, who declined to be
RSS