Federal Express (FedEx) has announced lower profits and sales than expected and many economists are worried that this miss will bode well for other companies who are reporting profits. FedEx is often seen as the canary in the mine for many other companies as their reporting of deliveries and cargo movements illustrate the health of many different industries. FedEx is the largest cargo shipper in the world and was started by Fred Smith.
In the four quarter, FedEx earned $2.66 per share compared to an expected profit of $2.69. These figures are excluding one-time charges. Sales were $12.1 billion for the quarter compared to expected sales of $12.3 billion.
The factors that were cited as the cause of the decline were lower fuel surcharges as a result of lower fuel costs and unfavorable currency translations that bit into the company’s profitability. The US dollar has been strong during the past year and many companies with significant foreign operations, such as FedEx have experienced foreign currency losses that bite into the underlying profits of the company.
Another change announced by the company increased the mandatory retirement age of board members to 75 from 72 which would allow Fred Smith to stay on as a board member for an additional few years, as he is currently 71 years old.
The stock is down in early trading on the news but will be more likely to be impacted by the Federal Reserve announcement on interest rates than on its own performance. Matt Landis will be monitoring it all.