FedEx, the world's second-largest package delivery company, posted a 12% decline in second-quarter profits today due to weakness in its air network and the impact of Superstorm Sandy.
The storm shaved 11 cents per share off of its earnings for the quarter as shipping volumes fell and costs rose.
But the company maintained its forecast for the full fiscal year ending in May, counting on a massive cost-cutting plan to offset global economic weakness.
Its forecast for the current quarter, which incorporates the critical Christmas season, falls below Wall Street expectations.
FedEx posted earnings of $438m, or $1.39 per share, for the quarter that ending in November, compared with $497m, or $1.57 per share, a year ago. That fell shy of the $1.41 per share that Wall Street was expecting, according to analysts.
Revenue rose to $11.1 billion from $10.6 billion previously as the company scaled back its operations to better match demand and some of its raised rates. Analysts forecast revenue of $10.84 billion.
Growth in the company's freight and ground operations boosted results, but FedEx reported "persistent weakness" in its core express network. Operating income in that segment fell 33%.
FedEx and its larger rival UPS have both seen consumers and businesses opt for slower shipping options to cut costs. FedEx said it expects earnings will be between $1.25 and $1.45 per share in the third quarter. Analysts were predicting earnings of $1.45 per share.
The company also said it expects to earn between $6.20 and $6.60 per share for the year ending in May, excluding any charges from the company's buyout plan.
Earlier this month, FedEx said it will offer some employees up to two years pay to leave, starting next year. The voluntary redundancy programme is part of an effort to cut annual costs by $1.7 billion within three years.
