FedEx Corp. expects the global economy to hit a higher gear later this year as fuel prices retreat from three-year highs and the Japanese economy recovers. While much of the growth will be driven by China and other developing nations, FedEx said the U.S. economy will improve as well.
The world's second-largest package delivery company issued the economic outlook Wednesday as it reported a33 percent increase in earnings for the quarter ended May 31.
FedEx expects the U.S. economy to grow 2.5 percent this year and 3 percent next year. The company expects growth to accelerate in the second half of the year. The economy grew at an annual rate of only 1.8 percent in the first three months of the year and isn't expected to grow much faster in the current quarter.
The Federal Reserve said Wednesday it expects the economy to grow between 2.7 and 2.9 percent this year.
Analysts and economists consider the Memphis, Tenn., company a bellwether of global economic health because it ships a wide variety of goods. Its financial performance reflects the ups and downs of business and consumer spending.
FedEx tends to perform well when industrial output is strong. The company expects U.S. industrial production to grow around 4.2 percent this year and another 4.3 percent next year.
In the company's fiscal fourth quarter, FedEx said, it overcame lofty diesel and jet fuel bills to post a 33 percent increase in profits. Strong demand allowed FedEx to hold firm on shipping prices with some of its major customers, and it levied higher fuel surcharges. Revenue per package increased 10 percent in the quarter.
For the three-month period that ended May 31, FedEx earned $558 million, or $1.75 per share, compared with $419 million, or $1.33 per share, in the same period last year. Revenue increased 12 percent to $10.55 billion.
For the full year, FedEx earned $1.45 billion, or $4.57 per share, compared with $1.18 billion, or $3.76 per share, for its previous fiscal year. Annual revenue grew 13 percent to $39.3 billion.
FedEx shares increased $2.31, or 2.6 percent, to $91.44.