FedEx Corp., the world’s largest cargo airline, sees full-year earnings rising as much as 13 percent as it reduces costs and jobs to counter customers’ preference for less expensive international shipping services.
Fourth-quarter earnings issued Wednesday topped projections after margins improved at the freight division and volume rose in the ground segment. FedEx’s 2014 earnings growth prediction of 7 percent to 13 percent equates to a maximum of $7.04 a share, short of the $7.28 average of analysts’ estimates compiled by Bloomberg.
FedEx, considered an economic bellwether because of the variety of goods it ships worldwide, is parking older planes sooner than planned and cutting capacity to Asia to help trim $1.7 billion in costs as customers opt for cheaper deliveries.
About 3,600 workers will leave under a voluntary buyout program, Memphis, Tenn.-based FedEx said.
“Our profit improvement program is progressing, but we continue to see the effects of customers selecting lower-rate international services,” Chief Financial Officer Alan Graf said. “FedEx Express will further decrease capacity between Asia and the United States in July.”
FedEx shares are up 9.6 percent for the year compared with a 14.2 percent gain for the Standard & Poor’s 500 Index.
For fiscal 2014, the company projects gross domestic product growth of 2.3 percent for the U.S. and 2.7 percent for the world, FedEx said.
Net income fell 45 percent to $303 million, or 95 cents a share, in its fiscal fourth quarter ended May 31, from $550 million, or $1.73, a year earlier. Excluding expenses related to company’s realignment program, earnings of $2.13 topped the $1.95 average estimate from analysts.
Sales rose 3.6 percent to $11.4 billion.