FedEx Corp. Chief Executive Officer Fred Smith said China, India and Brazil are leading a recovery in the express-shipping industry and he’s optimistic about the company’s prospects next year.
“As we get into the second half of fiscal 2011 and roll into 2012, we’re very bullish,” Smith said at an investor conference today in Memphis, Tennessee, where FedEx is based. The company’s fiscal year ends in May.
Smith’s remarks build on his Sept. 16 comment that FedEx, the second-largest U.S. package-shipping company, was seeing signs of a “solid” holiday-shipping season. Retailers are restocking after their inventory-to-sales ratio fell to 1.33 in March and April, the lowest since comparable records began in 1992.
“The arrow in global shipping points up,” Smith said. “FedEx Express is beating air cargo in general.”
The company is “back on track” to reach its long-term goals of earnings-per-share growth of 10 percent to 15 percent and operating profit margins of 10 percent or more, he said.
International air freight rose 20 percent in August from a year earlier, slowing from July’s 23 percent pace, according to the International Air Travel Association trade group.
Freight Still ‘Tough’
The freight unit, which handles shipments that weigh more than 150 pounds (68 kilograms), “continues to face a tough market” with too much capacity that is weighing on prices, Smith said.
FedEx said on Sept. 16 it would cut 1,700 jobs as it closes 100 facilities and combines freight and less-than-truckload operations. Most of the closings are transfer stations and warehouse space FedEx acquired when it bought Watkins Motor Lines in 2006.
Combining the freight operations will cost $150 million to $200 million and “substantially” improve profitability for the freight unit in fiscal 2012, the company said at the time.
FedEx slid 19 cents to $84.52 at 12:05 p.m. in New York Stock Exchange composite trading. The shares gained 1.5 percent this year before today.
United Parcel Service Inc. is the biggest U.S. package shipping company.
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