Package delivery company FedEx Corp reported a 75 percent drop in profit due to the global recession, gave a low quarterly outlook and said it was taking fresh actions to cut costs.
The Memphis-based company reported net income for its fiscal third quarter, ended February 28, of $97 million, or 31 cents a share, down from $393 million, or $1.26 a share, a year earlier.
Analysts had expected 46 cents a share, according to Reuters Estimates.
Like its main rival, Atlanta-based United Parcel Service Inc, FedEx is considered a bellwether of U.S. economic activity. When the economy does well, companies and consumers ship more goods; in a recession, package volumes drop.
FedEx said third-quarter revenue fell 14 percent to $8.14 billion.
The company said it was cutting capacity at its FedEx Express and FedEx Freight units, and reducing personnel and work hours.
FedEx said the measures would result in fourth-quarter charges of roughly $100 million and lead to a reduction in expenses of about $1 billion in its 2010 fiscal year.
In December, the company said it had suspended paying matching contributions to its 401 (k) retirement plan for a minimum of one year starting February 1 and would implement pay cuts for all salaried personnel. Smith took a 20 percent pay cut.
Our goal when we implemented compensation reductions in January for U.S. salaried personnel was to both protect our business and minimize the loss of jobs, the CEO said. With industrial production and global trade trends worsening since last quarter, we are applying these additional measures to continue to secure as many of our jobs as possible during this downturn.
For the current quarter FedEx said it expects to earn between 45 cents to 70 cents a share, below the average of 72 cents expected by analysts.
In premarket trade FedEx shares were down more than 5 percent at $40.75.
(Reporting by Nick Carey, editing by John Wallace, Dave Zimmerman)