FedEx profits rise 7% despite tepid global economy

Global package delivery giant FedEx Wednesday reported a seven percent increase in quarterly profits, as increased volumes of some North American deliveries offset declines in some premium international services. FedEx, which is often seen as a barometer for global economic conditions, said profits for the fourth quarter of fiscal 2013, which ended May 31, rose to $679 million from $634 million in the year-earlier period. Those figures are "adjusted profits" and exclude a 98 cents per share charge related to a cost-saving downsizing plan and a 20 cents per share aircraft charge. The company said 3,600 employees will be voluntarily leaving the company under a cost-saving program announced in October. Revenues came in at $11.4 billion compared with $11 billion a year ago. "FedEx Ground posted another strong year and FedEx Freight margins continued to improve," said FedEx chief executive Frederick Smith in a statement. "These positive developments did not fully offset tepid economic growth and customer preference for less costly international shipping services." FedEx Ground average daily volume grew 10 percent compared with the year-ago quarter. That helped push adjusted operating income for this segment to $557 million, up 13 percent from a year ago. The FedEx Ground segment covers North America. Profits in FedEx Express, which covers worldwide delivery, came in 11 percent higher, thanks in part to capacity reductions. While the volume of economy-priced international deliveries grew 11 percent, higher-priced priority volume shrank by 2 percent. Profit margin improvement is "expected to be moderate in fiscal 2014 and then accelerate in fiscal 2015," according to Alan Graf, the company's chief financial officer. FedEx said 2014 earnings per share were expected to grow 7-13 percent. Analysts had been projecting earnings growth of 22 percent during this stretch. FedEx shares were up 2.0 percent in late afternoon trade in New York.