Shipping giant FedEx Corp. (NYSE:FDX) slashed its third quarter profit forecast by 25 cents, blaming higher fuel prices and disruptions from winter storms in the U.S. and Europe.
The company, viewed as a bellwether for the broader economy, now expects adjusted earnings of $0.70 to $0.90 a share for the third quarter ending February 28, down from its prior forecast of $0.95 to $1.15 per share.
This guidance assumes no further weather impact and stable fuel prices for the remainder of the quarter, it said.
In the third quarter of last year, the company earned $0.76 per share.
The cut in quaterly profit forecast will also affect full-year guidance, FedEx said.
Analysts, polled by Thomson Reuters, expect the company to earn $1.04 a share in the quarter and $5.11for the full year.
We experienced significant network disruptions in the U.S. and Europe and unusually high costs from severe winter storms. In addition, fuel prices continued to escalate since we provided our earnings outlook in December, said chief financial officer Alan Graf, Jr.
FedEx, however, said it continues to see strength in its base business across all transportation segments and geographies.
Earlier this month, FedEx’s main rival UPS (NYSE: UPS) posted a 44 percent rise in fourth quarter earnings and said it expected 2011 earnings per share to set an all-time high.
Shares of FedEx, which have risen about 20 percent over the past 12 months, ended Tuesday's regular trading down 1.50 percent at $93.99. The shares have been trading in the 52-week range of $69.78 to $97.75. UPS closed at $74.80, down 0.69 percent.