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FedEx Freight | BIG COST CUTTING NEWS!!! FedEx Moves to Cut Costs, Posts Higher Profit

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FedEx Moves to Cut Costs, Posts Higher Profit - WSJ.com

CREDITED SOURCE: Wall Street Journal Online

FedEx Corp. is implementing more cost-cutting measures, citing the second-quarter shipping decline and expectations the economy will remain difficult next year.

"Our financial performance is increasingly being challenged by some of the worst economic conditions in the company's 35-year operating history," Chief Executive Frederick Smith said in the company's release, which also included quarterly results.

The measures include base-salary decreases effective Jan. 1. Mr. Smith's salary will be lowered by 20%, while other senior executives will see cuts of 7.5% to 10%. The package shipper is also eliminating bonuses and suspending company matching for its 401(k) plan.

FedEx, often considered a bellwether for the U.S. economy because of its massive shipping volume, said it has already cut about $1 billion in expenses for fiscal 2009 by cutting jobs at FedEx Freight and FedEx Office, eliminating variable compensation, starting a hiring freeze and cutting back work hours.

For its fiscal second quarter ended Nov. 30, FedEx reported net income of $493 million, or $1.58 a share, up from $479 million, or $1.54 a share, a year earlier. The result matched the company's projection issued earlier this month, at which time it said lower fuel costs would bolster its bottom line.

Revenue increased 1% to $9.54 billion. Analysts surveyed by Thomson Reuters expected revenue of $9.88 billion.

As oil and diesel-fuel prices recede, trucking and shipping companies are now faced with concerns about volume, which has struggled during the economic downturn as companies slow orders and sales across a broad range of industries.

Daily volume in FedEx's express and ground segments fell 2% as the weak economy reduced demand for shipping services. Both segments posted increases in operating margins, with express edging up to 8.9% from 8.8% and ground rising to 11.9% from 10.2%. U.S. domestic express package volume slid 8%, although revenue per package increased 9% on higher fuel surcharges.

Last month, FedEx said it would raise standard rates for ground and home delivery services by an average of 5.9% starting Jan. 5, matching rival United Parcel Service Inc. FedEx announced in September that air-service rates would increase 6.9%, but the actual increase will be two percentage points less as fuel surcharges get reduced. UPs' air increase is also 4.9%.

Looking ahead, FedEx projected earnings for the second half of fiscal 2009 of 69 cents to $1.94 a share. It said it won't provide third-quarter guidance due to the economic uncertainty. Analysts were looking for third-quarter earnings of 54 cents a share. The company affirmed a full-year estimate of $3.50 to $4.75 a share.

In a sign of how bad the times are getting, FedEx, usually a loyal Super Bowl advertiser, is still undecided about whether it would buy ad time, and was hoping to wait for a bargain. A person close to the company said FedEx was concerned that shelling out big bucks -- Super Bowl ads can run up to $3 million for a 30-second spot -- at a time when it is asking employees to do more with less would look "wrong."
 
BIG COST CUTTING NEWS!!!

FedEx Moves to Cut Costs, Posts Higher Profit - WSJ.com

CREDITED SOURCE: Wall Street Journal Online

FedEx Corp. is implementing more cost-cutting measures, citing the second-quarter shipping decline and expectations the economy will remain difficult next year.

"Our financial performance is increasingly being challenged by some of the worst economic conditions in the company's 35-year operating history," Chief Executive Frederick Smith said in the company's release, which also included quarterly results.

The measures include base-salary decreases effective Jan. 1. Mr. Smith's salary will be lowered by 20%, while other senior executives will see cuts of 7.5% to 10%. The package shipper is also eliminating bonuses and suspending company matching for its 401(k) plan.

FedEx, often considered a bellwether for the U.S. economy because of its massive shipping volume, said it has already cut about $1 billion in expenses for fiscal 2009 by cutting jobs at FedEx Freight and FedEx Office, eliminating variable compensation, starting a hiring freeze and cutting back work hours.

For its fiscal second quarter ended Nov. 30, FedEx reported net income of $493 million, or $1.58 a share, up from $479 million, or $1.54 a share, a year earlier. The result matched the company's projection issued earlier this month, at which time it said lower fuel costs would bolster its bottom line.

Revenue increased 1% to $9.54 billion. Analysts surveyed by Thomson Reuters expected revenue of $9.88 billion.

As oil and diesel-fuel prices recede, trucking and shipping companies are now faced with concerns about volume, which has struggled during the economic downturn as companies slow orders and sales across a broad range of industries.

Daily volume in FedEx's express and ground segments fell 2% as the weak economy reduced demand for shipping services. Both segments posted increases in operating margins, with express edging up to 8.9% from 8.8% and ground rising to 11.9% from 10.2%. U.S. domestic express package volume slid 8%, although revenue per package increased 9% on higher fuel surcharges.

Last month, FedEx said it would raise standard rates for ground and home delivery services by an average of 5.9% starting Jan. 5, matching rival United Parcel Service Inc. FedEx announced in September that air-service rates would increase 6.9%, but the actual increase will be two percentage points less as fuel surcharges get reduced. UPs' air increase is also 4.9%.

Looking ahead, FedEx projected earnings for the second half of fiscal 2009 of 69 cents to $1.94 a share. It said it won't provide third-quarter guidance due to the economic uncertainty. Analysts were looking for third-quarter earnings of 54 cents a share. The company affirmed a full-year estimate of $3.50 to $4.75 a share.

In a sign of how bad the times are getting, FedEx, usually a loyal Super Bowl advertiser, is still undecided about whether it would buy ad time, and was hoping to wait for a bargain. A person close to the company said FedEx was concerned that shelling out big bucks -- Super Bowl ads can run up to $3 million for a 30-second spot -- at a time when it is asking employees to do more with less would look "wrong."
 
The most important part of this news for rank and file employees is:

The package shipper is also eliminating bonuses and suspending company matching for its 401(k) plan.
 
The most important part of this news for rank and file employees is:

The package shipper is also eliminating bonuses and suspending company matching for its 401(k) plan.
 
slider said:
Stocks Climb on Claims, FedEx - WSJ.com
Did I read this correctly about a 5% pay cut.:nutkick:
Click to expand...

You did! Does this mean we are only getting our wages cut half as much as Yellow-Roadway workers? I don't like it but, you had to know it was coming. The teamsters vote does not matter. Vote no on 10% concession and the bankers liquidate YELLOW-ROADWAY until they get their money, then they reopen approx. 1/3 their current size. Vote YES and you get a 10% cut in wages and then they merge YELLOW-ROADWAY into one company,and layoff 1/2 their workers. This sucks- but it could always be worse.
 
slider said:
Stocks Climb on Claims, FedEx - WSJ.com
Did I read this correctly about a 5% pay cut.:nutkick:
Click to expand...

You did! Does this mean we are only getting our wages cut half as much as Yellow-Roadway workers? I don't like it but, you had to know it was coming. The teamsters vote does not matter. Vote no on 10% concession and the bankers liquidate YELLOW-ROADWAY until they get their money, then they reopen approx. 1/3 their current size. Vote YES and you get a 10% cut in wages and then they merge YELLOW-ROADWAY into one company,and layoff 1/2 their workers. This sucks- but it could always be worse.
 
We're hearing it's only salaried employees that are getting the 5% cut. As ususal, I think the media is not reporting it accurately.
 
We're hearing it's only salaried employees that are getting the 5% cut. As ususal, I think the media is not reporting it accurately.
 
this is dirctly from fred smith memo..



o Effective January 1, 2009, all salaried-exempt FedEx employees in the U.S. will take a permanent reduction in pay, across the board. My salary will be reduced by 20 percent; the Strategic Management Committee members by 10 percent; and executive vice presidents at core operating companies by 7.5 percent. All other U.S. salaried FedEx employees will take a 5-percent reduction. These pay actions do not affect hourly employees or contractors.
 
this is dirctly from fred smith memo..



o Effective January 1, 2009, all salaried-exempt FedEx employees in the U.S. will take a permanent reduction in pay, across the board. My salary will be reduced by 20 percent; the Strategic Management Committee members by 10 percent; and executive vice presidents at core operating companies by 7.5 percent. All other U.S. salaried FedEx employees will take a 5-percent reduction. These pay actions do not affect hourly employees or contractors.
 
The economy is still headed down the sewer. Cutting wages gives people less buying power to bolster the economy. Raising prices on goods and services gives us even less buying power. Fedex isn't the only one doing both of these things. How is this supposed to help us recover? The only things going down besides our wages are the value of our homes, and gas. We all know the gas prices are temporary because OPEC wants us hooked on oil again with all this talk of alternative energy. I smell a working class revolution in the works...
 
The economy is still headed down the sewer. Cutting wages gives people less buying power to bolster the economy. Raising prices on goods and services gives us even less buying power. Fedex isn't the only one doing both of these things. How is this supposed to help us recover? The only things going down besides our wages are the value of our homes, and gas. We all know the gas prices are temporary because OPEC wants us hooked on oil again with all this talk of alternative energy. I smell a working class revolution in the works...
 
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