Oil's loss is FedEx's gain

David Berman, September 17, 2008 at 6:00 PM EDT

Here's John Heinzl's At The Bell which you'll find in Thursday's newspaper:

There aren't a lot of silver linings to the turmoil in financial markets right now, but Thursday could bring a glimmer of good news when FedEx Corp. reports first-quarter results.

Shares of the world's biggest air-parcel delivery company are down about 25 per cent from their 2007 highs, pummelled by high energy prices and slowing global growth.

WHAT ARE THE EXPECTATIONS?

Now that oil has fallen sharply from record levels reached earlier this summer, FedEx's bottom line stands to benefit. Other companies that use large amounts of fuel should also see some relief, providing a rare bright spot in an otherwise gloomy economic outlook.

Last week, Memphis-based FedEx said it expects to post share profit of $1.23 (U.S.) a share for the first quarter ended Aug. 31. That's up from previous earnings guidance of 80 cents to $1 a share, but down from last year's first-quarter profit of $1.58.

In addition to lower fuel prices, the company benefited from “stringent cost management” during the most recent quarter, said Alan Graf, executive vice-president and chief financial officer of FedEx.

For the full year, FedEx reaffirmed its earnings guidance of $4.75 to $5.25 a share. But those numbers could also rise if there are “sustained declines in fuel prices,” Mr. Graf said, while cautioning that slowing growth in the United States is now extending to other parts of the globe.

Citing the slowing economy, FedEx slashed its capital spending plans to $2.6-billion from $3-billion for fiscal 2009.