OREANDA-NEWS. FedEx Corp. reported earnings of USD 1.23 per diluted share for the third quarter ended February 28, compared to USD 1.13 per share last year.  Unusually severe winter storms throughout the quarter disrupted operations, decreasing shipping volume and increasing costs, and impacted year-over-year operating income by an estimated USD 125 million.  Last year's third quarter results were impacted by business realignment costs totaling USD 47 million, primarily related to the company's voluntary buyout program for eligible U.S. officers and managing directors.  Excluding the realignment costs, last year's third quarter earnings were USD 1.23 per diluted share.

"Historically severe winter weather significantly affected our third-quarter earnings," said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer.  "On days when the weather was closer to normal seasonal conditions, our volumes were solid and service levels were high.  The FedEx strategy of maintaining separate express and ground networks with multiple hubs proved to be an especially important advantage for our package customers during this quarter's severe weather and peak shipping."

Third Quarter Results
FedEx Corp. reported the following consolidated results for the third quarter:
• Revenue of USD 11.3 billion, up 3% from USD 11.0 billion the previous year
• Operating income of USD 641 million, up 9% from USD 589 million last year
• Operating margin of 5.7%, up from 5.4% the previous year
• Net income of USD 378 million, up 5% from last year's USD 361 million

Operating results increased despite the impact of severe winter weather.  Results also include a negative net impact from fuel.  These headwinds were partially offset by the benefit from one additional operating day in each transportation segment.

During the third quarter, the company entered into accelerated share repurchase agreements to repurchase an aggregate of USD 2.0 billion of the company's common stock.  Share repurchases had a minimal positive impact on third quarter earnings per diluted share.

Outlook
FedEx projects earnings to be USD 2.25 to USD 2.50 per diluted share in the fourth quarter and USD 6.55 to USD 6.80 per diluted share for fiscal 2014.  This outlook reflects share repurchases made to date, but does not include any benefit from additional share repurchases.  Share repurchases are expected to continue, but the timing will be at the company's discretion.  The outlook also assumes the market outlook for fuel prices and continued moderate economic growth.  The capital spending forecast for fiscal 2014 is now USD 3.8 billion, down USD 200 million from the previous forecast.

"While severe winter weather often affects our third-quarter results, the impact from multiple severe storms and frigid temperatures was significantly more pronounced this year and we are reducing our full-year earnings per share guidance as a result of the weather impact," said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer.  "The USD 1.6 billion profit improvement plan at FedEx Express remains on track despite the near-term impact of weather.  Our accelerated stock repurchase program initiated in January reflects our confidence in achieving our financial goals."