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Friday, May 09, 2008

Oil Prices Slam FedEx

FOXBusiness

Shipping company FedEx provided clear evidence of the negative impact of triple-digit oil prices when it slashed its fiscal fourth-quarter earnings forecast below Wall Street estimates late Friday.

Citing an estimated 7% jump in fuel costs during the current quarter, FedEx (FDX) said it now sees earnings in the range of $1.45 to $1.50 per share, compared to its earlier forecast of $1.60 to $1.80. Analysts polled by Thomson Reuters had been looking for a profit of $1.69 per share.

FedEx said its fuel costs have surged $100 million higher from its previous estimate as oil prices have soared in recent weeks. During May alone, crude prices jumped $11, including five consecutive record days this week. Crude closed at $125.96 a barrel in New York on Friday after briefly crossing over $126.

The shipping giant also said it's been hurt by "restrained demand" for shipping due to the "weak economy."

FedEx warned that things could get worse if the conditions deteriorate further.

"While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices. This revised outlook assumes no additional increases to the current fuel price environment and no further weakening of the economy," Alan B. Graf, Jr., FedEx executive vice president and chief financial officer, said in a statement.

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