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Global Trade Bellwether FedEx Cuts Outlook, CapEx Forecast, Says May Ground Aircraft

Tyler Durden's picture




 

We are lucky that in the new normal earnings, cash flows, news, and broadly reality, are completely irrelevant, and all that matters is the central bank-sponsored S&P multiple expansion (due to monetary dilution), or else the news from moments ago that FedEx once more cut not only its EPS but CapEx (and thus growth spending) may have been negative for stocks, and even mentioned by assorted propaganda networks. And since none of the above will happen, here is the bottom line: FedEx - the bellwether for global trade and logistics - just cut its year EPS from $6.20-$6.60 to $6.00-$6.20, and slashed CapEx from $3.9 billion to $3.6 billion. But at least in keeping with the demands of ZIRP, the company instead of spending on growth, which is obviosuly not there, will instead buy back 10 million shares of stock. This tells you all you need to know about the "recovery."

From the release:

FedEx projects earnings to be an adjusted $1.90 to $2.10 per diluted share in the fourth quarter and an adjusted $6.00 to $6.20 per diluted share for fiscal 2013 before charges related to the company’s business realignment. Costs of the benefits provided under the voluntary buyout program will be recognized in the period that eligible employees accept their offers, predominantly in the fourth fiscal quarter. Including the third quarter costs, the company now expects the fiscal 2013 pretax cost of the voluntary buyout program to range from approximately $450 million to $550 million in cash expenditures, or $0.89 to $1.09 per diluted share, with some additional costs expected in fiscal 2014. Actual costs will depend on employee acceptance rates. Including the business realignment costs, earnings are expected to be $0.94 to $1.34 per diluted share in the fourth quarter and $4.91 to $5.31 per diluted share for fiscal 2013. This guidance assumes the current market outlook for fuel prices. The capital spending forecast for fiscal 2013 is now $3.6 billion, compared to $3.9 billion in the company’s previous forecast.

 

In last year’s fourth quarter, the company reported earnings of $1.99 per diluted share, excluding a $0.26 per diluted share non-cash aircraft impairment charge at FedEx Express. Including this charge, earnings were $1.73 per diluted share.

 

Our lower-than-expected results for the quarter and reduced full-year earnings outlook were driven by third quarter international revenues declining approximately $100 million versus our guidance primarily due to accelerating customer preference for lower-yielding international services, lower rate per pound and weight per shipment,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “We expect these international revenue trends to continue. We have other actions under way beyond those already included in our profit improvement program. Some of these additional actions may involve temporarily or permanently grounding aircraft, which could result in asset impairment or other charges in future periods.”

 

“In early February, a number of officers and managing directors, primarily at FedEx Services and FedEx Express, accepted voluntary buyouts, and on February 15, thousands more team members were notified of their eligibility for the buyout program. This program is one of the first steps in a process that will help FedEx Express achieve necessary cost structure reductions and improved efficiency. In addition to continued profit improvements in the base businesses at FedEx Ground and FedEx Freight, our profit improvement programs are targeting annual profitability improvement at FedEx Express of $1.6 billion by the end of fiscal 2016, from the fiscal year 2013 base business. Collectively, these initiatives are expected to increase margins, improve cash flows and increase our competitiveness,” said Graf.

But what about 2022??

 

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Wed, 03/20/2013 - 08:02 | 3351514 Iocosus
Iocosus's picture

bullish news (bitchez)

Wed, 03/20/2013 - 08:04 | 3351522 King_of_simpletons
King_of_simpletons's picture

Oh boy, all this great news on the economy and the soaring stock market is making my thighs tingle and sending shivers up my hairy legs.

Wed, 03/20/2013 - 08:19 | 3351555 Doomer
Doomer's picture

I advise caution.  Don't buy the ramp until the next Hollywood bimbo endorses stocks.

As for me, I am waiting to put everything into the Kunis hedge fund.

Wed, 03/20/2013 - 08:22 | 3351563 Iocosus
Iocosus's picture

Ms. Fox's advise:

"Like, buy, fer sure. C U latr."

Wed, 03/20/2013 - 09:12 | 3351772 aint no fortuna...
aint no fortunate son's picture

Larry Fucking Fink has them a BUY too!

Wed, 03/20/2013 - 10:22 | 3351949 TruthInSunshine
TruthInSunshine's picture

FedEx dominates shipping for biz and the masses

its got a crazy friend Caterpillar that wears dark glasses

Things in China are going great, and they're only getting better


Wed, 03/20/2013 - 15:32 | 3353592 MisterMousePotato
MisterMousePotato's picture

Gotta wear shades, things look so bright.

Wed, 03/20/2013 - 08:33 | 3351589 GolfHatesMe
GolfHatesMe's picture

Who isn't

Wed, 03/20/2013 - 08:33 | 3351591 sumo
Wed, 03/20/2013 - 08:35 | 3351596 King_of_simpletons
King_of_simpletons's picture

I can't wait for Kunis's Crazy Money Show on CNBC.

Wed, 03/20/2013 - 20:53 | 3354930 merizobeach
merizobeach's picture

Your second link has a photo... Damn, those are some ugly whores.

Wed, 03/20/2013 - 09:00 | 3351706 azzhatter
azzhatter's picture

I am waiting to get some investment strategy from Sean Penn, then I'll make my moves

Wed, 03/20/2013 - 09:27 | 3351847 otto skorzeny
otto skorzeny's picture

beware the Jewess Kunis

Wed, 03/20/2013 - 15:49 | 3353667 akak
akak's picture

Don't you have some crematoria to fuel, or ashes to bury, or piles of gold teeth to sort through?

Wed, 03/20/2013 - 08:04 | 3351523 GetZeeGold
GetZeeGold's picture

 

 

Don't stare at the futures ramp....you might go blind.

Wed, 03/20/2013 - 08:51 | 3351657 adr
adr's picture

Question. If FedEx shipping is down so much and the US postal service is essentially bankrupt, wouldn't that be good proxy for ecommerce demand?

Unless a whole lot of people like to buy things on Amazon and not have them delivered.

Oh yeah, I forgot, Amazon is transitioning into a digital media delivery corporation and will be worth more than every movie studio, TV network, and music producer combined.

Wed, 03/20/2013 - 09:11 | 3351764 Matt
Matt's picture

I think this could be a sign of the beginning of the end of "just in time". Note the trend they see is more people internationally using less expensive, slower shipping methods. Long railroads and ships, short jets seems to be the way of the future.

Wed, 03/20/2013 - 08:14 | 3351543 Doomer
Doomer's picture

Just think of all the plane-loads of cash they will be flying out of Cyprus!  That should make up for any loss in their business due to the "recovering" economy.

Wed, 03/20/2013 - 09:21 | 3351806 eclectic syncretist
eclectic syncretist's picture

Yeah, just have the fed print up the 300 trillion dollars needed to cover derivatives exposure and then have FedEx fly that around.  How many Jumbo airliners would that put to work?

Wed, 03/20/2013 - 08:25 | 3351571 Stoploss
Stoploss's picture

RRRRRRRRRAAAAAAALLLLYYYYYYYY!!!!!!!!!!!!!!!!!!!!!!!!!!

Wed, 03/20/2013 - 08:31 | 3351584 GolfHatesMe
GolfHatesMe's picture

If GM would only start FEDEXing cars to the dealers, fixed!

Wed, 03/20/2013 - 08:07 | 3351527 onewayticket2
onewayticket2's picture

lower service levels on the way.....but "there's no inflation"

Wed, 03/20/2013 - 08:27 | 3351575 Cursive
Cursive's picture

@onewayticket2

So true.  Stealth inflation.  It even causes a shortage of products.

Wed, 03/20/2013 - 08:31 | 3351582 LawsofPhysics
LawsofPhysics's picture

Inflation causing a shortage of products?  Krugman says that is impossible, better print some more, oh wait isn't that what we have been doing?  I guess one's perspective is different when one is close to the printing press and free money.  Roll the motherfucking guillotines already.

Wed, 03/20/2013 - 08:07 | 3351529 GrinandBearit
GrinandBearit's picture

Please not yet... I have a very large Ag purchase that is still in route!

Wed, 03/20/2013 - 08:19 | 3351554 GetZeeGold
GetZeeGold's picture

 

 

Coming Pony Express now amigo...

Wed, 03/20/2013 - 08:57 | 3351692 de3de8
de3de8's picture

Me too!

Wed, 03/20/2013 - 08:08 | 3351530 blindman
blindman's picture

closed one location in greater new York area
that I know of and another in the works I hear,
to be closed. might be others? right sizing they
call it? or ...business sucks cause the economy sucks
cause the monetary system ran out of further suckers.
it needs either newer suckers or bigger suckers , or both,
and if they can't be found they be made out of whoever
happens to be standing around in traffic.
when do we get back to the irrational exuberance part?

Wed, 03/20/2013 - 08:08 | 3351531 swissaustrian
swissaustrian's picture

Stock buybacks are for the execs, so they can excercise options at inflated prices just to sell stock shortly thereafter.

Wed, 03/20/2013 - 08:12 | 3351538 buzzsaw99
buzzsaw99's picture

Yep. They are the only ones selling and the only people the bernank cares about.

Wed, 03/20/2013 - 08:21 | 3351561 scatterbrains
scatterbrains's picture

If they were smart they'd buy gold not stock..  in fact do secondary stock offerings while Benny B is lifting spoo to dump into.

Wed, 03/20/2013 - 08:36 | 3351600 buzzsaw99
buzzsaw99's picture

They get their stock for free from the company. Let the looting continue!

Wed, 03/20/2013 - 08:14 | 3351541 mvsjcl
mvsjcl's picture

It's all good. I mean, negative growth is still growth, right?

Wed, 03/20/2013 - 08:53 | 3351667 Dubious Maximus
Dubious Maximus's picture

if it's negative growth as defined as shrinkage a la George Costanza, that isn't good

Wed, 03/20/2013 - 08:17 | 3351547 Dubious Maximus
Dubious Maximus's picture

profit expansion by continual cost reduction.

yup, that's "healthy"

 

Wed, 03/20/2013 - 08:18 | 3351551 Taterboy
Taterboy's picture

All good Americans need to get in front of the TV,turn on QVC and buy, buy, buy, and tell the operator you GOTTA have it by tomorrow.

Wed, 03/20/2013 - 08:20 | 3351557 Yes_Questions
Yes_Questions's picture

 

 

Jus keep funding your DC tools so they'll legislate a tripling of the current pension requirements of the USPS and Voila!: Fed Ex Driver looking bastard children all over.

 

 

 

 

 

Wed, 03/20/2013 - 08:22 | 3351562 sumo
sumo's picture

Yes! Green shoots growing from the asscrack of the V-shaved (sic) recovery! Alrighty, then.

A knavish fellow might try to get Congress to shut down USPS so that FedEx gets the extra business. Fortunately, members of Congress are honorable folk and would reject such a dark plan ...

Wed, 03/20/2013 - 08:24 | 3351567 lizzy36
lizzy36's picture

UNPOSSIBLE

Dow transports hit a new high yesterday. 

Rainbows and Unicorns for all!

Wed, 03/20/2013 - 08:30 | 3351580 orangegeek
orangegeek's picture

Big surprise.  Revised earnings. Revised government reports are pending.

 

And the Dow Jones....

 

http://bullandbearmash.com/chart/dow-jones-daily-falls-macd-price-diverg...

 

....is up 70 points on the pre-open.

Wed, 03/20/2013 - 08:35 | 3351597 LawsofPhysics
LawsofPhysics's picture

Are you suggesting the the markets are truly functioning and reflecting true price discovery?  LMFAO, yeah and Bubbles bernanke is going to come out today and say that interest rates are going up.  Free money for all, enjoy the ramp into armageddon.

Wed, 03/20/2013 - 08:31 | 3351583 CheapBastard
CheapBastard's picture

Excellent service but very high prices. Hard for a small company to make a profit shipping this way ...and now USPS hiked its rates also. IMO moar small businesses will go belly-up; they cannot afford shipping rates, poor sales and rising consumer fraud. My neighbor down the street is closing his stores (physical and internet) and he cites these reasons.

Wed, 03/20/2013 - 10:21 | 3352038 nonclaim
nonclaim's picture

Tell him ebay is lowering the rates for small shops, flat rate instead of percentage if I'm not mistaken. It may offset the higher shipping rates...

Wed, 03/20/2013 - 08:33 | 3351593 TheMerryPrankster
TheMerryPrankster's picture

Fedex is an indicator of business and consumer activity and food stamps are an indication of consumer income.

Foodstamps up = income down.

Fedex down = business/consumer down

expect an increase in food stamp participation soon.

Go long JP Morgan, the food stamp king.

soon the government will go back to physical food stamps instead of electronic cards and Fedex will deliver them in an attempt at manipulating economic perceptions, which is after all the only purposes of government. How else can crony capitalism survive? Why do you hate America?

Wed, 03/20/2013 - 08:39 | 3351613 sumo
sumo's picture

There is an obvious opportunity here: SNAP futures and options, Collateralized Food Obligations, Nutritional Default Swaps ... Jamie Dimon, my God man, what are you waiting for?

Wed, 03/20/2013 - 08:44 | 3351632 adr
adr's picture

Nutritional Default Swaps. Is that a securitization based on the caloric intake of EBT users? Fuck man, value to the moon on that one. Once Twinkies go back on he shelf you can see a 200% gain in days.

Damn, we'll be rich.

Wed, 03/20/2013 - 08:48 | 3351644 sumo
sumo's picture

Blythe, let's do this. First mover, babe!

Wed, 03/20/2013 - 08:40 | 3351618 MFLTucson
MFLTucson's picture

The clowns dont care about earnings, this is all about what Mr. Bernanke will say today, despite the fact that he has been wrong on everything he has done!

Wed, 03/20/2013 - 08:41 | 3351623 adr
adr's picture

But Krugman says when people aren't buying the government needs to step in and buy so we can get a self sustaining recovery.

The government needs to start shipping FedEx. Heard you can save like 10% shipping FedEx.com.

Doesn't the government own the world's largest mail and shipping business? That is billions of dollars in debt?

Maybe Krugman is wrong and government involvement doesn't end with a self sustaining business. Nah, he's got a Nobel Prize and everybody knows that means he's smarter than all of us combined.

/sarc obviously

Wed, 03/20/2013 - 15:59 | 3353714 lakecity55
lakecity55's picture

U heard it on ZH first!

FDX to be Nationalized!!

Wed, 03/20/2013 - 08:54 | 3351672 Bangin7GramRocks
Bangin7GramRocks's picture

The new America! Freeze salaries of your employees and use the money to buy back stock and enrich executives even more. They are transforming what was once a solid blue collar career into a low paying joe job. Good luck selling houses to guys making $16 an hour.

Wed, 03/20/2013 - 09:22 | 3351812 sumo
sumo's picture

In New America, salaries freeze you!

Wed, 03/20/2013 - 15:43 | 3353645 MisterMousePotato
MisterMousePotato's picture

In much of the country, 16 bucks an hour really isn't all that bad. In fact, if one was intelligent, patient, ruthless, realistic, ambitious, educated, hardworking, frugal, and modest, one could even thrive on such an income over time. Yes, it would require a certain fortuitous confluence of factors (such as the degree of government oppression locally, the amount of manipulation in the local housing market, the existence of real competition locally in grocery stores, and the like), but I could do it, and might even enjoy the challenge.

Wed, 03/20/2013 - 09:30 | 3351859 ptoemmes
ptoemmes's picture

Methinks a setup for an earnings beat.

Wed, 03/20/2013 - 09:38 | 3351884 WTF_247
WTF_247's picture

Yet another perma-bullish indicator to go "all in" into equities.  Who cares about one of the biggest transport companies that ships packages for almost every major corporation in the world warning that things are slowing.  GDP will easily be up 7-9% this year, stock market looking for 25% gains.  

When you do not have to worry about anything because your rich uncle Ben is handing you money its easy to sleep at night.

Wed, 03/20/2013 - 10:17 | 3352033 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

FDX trading down 5%+???  Investors have clearly gotten it wrong here.  You don't pay attention to something as trivial as an earnings forecast reduction and a 10% cut in capex (see Larry Fink, et al).

 

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