FedEx Profit Up, Raises Outlook

Different size Fedex boxes wait to be loaded into trucks for delivery at the Fedex San Francisco Station on Tuesday, June 20, 2006. FedEx Corp., operator of the world's largest express transportation company, on Wednesday reported a 27 percent jump in fourth-quarter earnings, citing solid economic growth in U.S. and international markets. (AP Photo/ Tony Avelar) (Tony Avelar - AP)

MEMPHIS, Tenn. -- FedEx Corp. reported a 27 percent increase in fourth-quarter earnings Wednesday, raised its profit forecast for the coming year and saw its shares rise more than 5 percent.

The company earned $568 million, or $1.82 a share in the quarter ending May 31. That was up from $448 million, or $1.46 a share, a year ago. Revenue grew 10 percent, from $7.72 billion to $8.49 billion.

The results easily beat Wall Street expectations. On average, Wall Street analysts surveyed by Thomson Financial predicted earnings of $1.77 a share on sales of $8.42 billion.

Shares of FedEx soared $5.54, or 5.1 percent, to close at $113.86 in trading on the New York Stock Exchange. That is near the high end of the stock's range of $76.81 to $120.01 over the past year.

Memphis-based FedEx said strong U.S. and international economies contributed to the income growth.

Continued growth in those segments also was cited in raising the outlook.

"We remain optimistic about the global economic environment for fiscal 2007 and our ability to effectively manage our business," said Frederick W. Smith, FedEx founder and chief executive.

FedEx predicted earnings of $1.45 to $1.60 a share in the first quarter of fiscal 2007 and $6.45 to $6.80 a share for the year.

On average, analysts predict first-quarter profit for 2007 of $1.43 a share and earnings of $6.73 a share for fiscal the year.

Ben Weagraff, an economist with Moody's Economy.com, said shipping companies like FedEx can be good barometers, though FedEx's projected growth doesn't necessarily mean the economy will follow suit.

The Federal Reserve has said it would raise interest rates as much as necessary to curb inflation, and Wall Street economists expect Fed officials to continue raising rates over the coming months.

"Revenues have been growing in this industry, in trucking," Weagraff said. "FedEx is a good barometer for the economy, you can make a valid argument for that because they are the transferrers of goods throughout the economy.