FedEx Corp, which is currently the biggest cargo airline in the world, reduced its full-year profit forecast due to harsh winter weather that resulted in declining third-quarter results, which trailed analysts estimates. The company made an official statement, explaining that “unusually severe winter storms” during the quarter had caused damage to its operations and raised the companys costs.
As reported by the Financial Times, the Chief Executive Officer of FedEx said: “Historically severe winter weather significantly affected out third-quarter earnings.”
FedEx posted a 378-million-dollar profit for the quarter that ended on February 28th, or 1.23 dollars per share. This is an increase from the 361-million-dollar profit posted by the company a year earlier, but was well below analysts projections for a jump to $471 million. The revenue of FedEx was reported to have increased by 3.2% to 11.3 billion dollars.
The company, however, reduced its full-year profit expectations from between 6.73 to 7.10 dollars a share to between 6.55 and 6.80 dollars a share. This forecast missed analysts estimates of 6.90 dollars per share, according to data compiled by Bloomberg.
Alan Graf, the companys Chief Financial Officer, shared in the statement, which was cited by the Wall Street Journal: “While severe winter weather often affects our third-quarter results, the impact from multiple severe storms and frigid temperatures was significantly more pronounced this year, and we are reducing our full-year earnings per share guidance as a result of the weather impact.”
According to one of the analysts of Avondale Partners LLC – Donald Broughton – the company had to delay its money-back delivery guarantee 11 times due to severe weather conditions. This seriously influenced its results and was pointed out as the main reason why the company posted a lower full-year profit forecast for 2014.
FedEx Corp fell by 0.25% by 15:31 GMT in New York to trade at $138.22, marking a one-year change of +30.20%. The company is valued at 43.27 billion dollars. According to the Financial Times, the 24 analysts offering 12 month price targets for FedEx Corp have a median target of $152.50, with a high estimate of $190.00 and a low estimate of $125.00. The median estimate represents a 10.05% increase from the previous close of $138.57.
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