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FDX earnings fall slightly
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September 24, 1998: 12:48 p.m. ET
FedEx parent blames inflated year-ago quarter for drop in earnings
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NEW YORK (CNNfn) - FDX Corp. posted a modest drop in first-quarter earnings on Thursday, due partly to last year's over-inflated profits and continued lethargy in overseas markets.
The parent of Federal Express Corp. and RPS Inc. (RPS) posted earnings of $149 million, or $1 per diluted share, for the quarter ended Aug. 31, compared with profits of $165 million, or $1.11 per share, last year.
The package carrier attributed much of its 200-percent increase in quarterly profits last year to the unexpected gain of 9.5 million packages during the United Parcel Service strike.
Last year's earnings would have come in at 85 cents per share had the UPS strike not boosted results by 25 cents a share.
On an operating basis for the most recent quarter, the $16-billion holding company earned $284 million, compared with $304 million a year ago.
Analysts had expected FDX to earn 96 cents per share, according to First Call.
Revenues for the quarter climbed 6 percent to $4.1 billion over last year's $3.9 billion.
"These solid financial results prove that FDX is benefiting from its diversified portfolio of transportation companies," said Chairman, President and Chief Executive Officer Frederick W. Smith. "The combined U.S. domestic growth for FedEx and RPS coupled with the successful implementation of yield management actions, productivity enhancements and stringent cost reduction initiatives more than offset the impact of the difficult international business environment."
Last October, Federal Express announced it would buy Caliber Systems Inc., and its RPS Inc. subsidiary, in a stock swap valued at $2.4 billion. To manage the companies more efficiently, FedEx created FDX Corp. to hold FedEx plus its newly-acquired Caliber subsidiaries - RPS, Viking Freight, Caliber Logistics, Roberts Express and Caliber Technology.
In August, Federal Express said Asia's economic slump had forced the company to delay part of its planned expansion in Asia, Pacific and Latin America.
Overall, analysts say FDX's numbers were not surprising.
"You've got the effects of the global slow-down showing up across the board," said analyst Steven Lewins of Gruntal & Co. "This company is getting more and more complicated because of expansions and acquisitions."
Lewins expected the company to earn 95 cents a share.
Shares of FDX (FDX) were up 5/8 at 50-5/8 Thursday afternoon on the New York Stock Exchange. 
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Federal Express
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