Today FedEx joined a growing list of companies that have announced plans to cut costs in response to lower-than-expected earnings. (See: The Stupid Futility of Cost Cutting and Triple Whammy in the PC Arena.)
Though revenue for FedEx's fiscal fourth quarter, which ended in May, rose to $11 billion from $10.6 billion a year earlier, earnings declined to $550 million from $558 million, the company said in a press release. The results were slightly below expectations, and FedEx said it expects higher costs to restrain its earnings over the next 12 months.
Alan B. Graf, Jr., the company's executive vice president and chief financial officer, said in the release:
We are focused on improving margins in all businesses, although we face certain cost increases in fiscal 2013. These headwinds include higher employee-related costs, including higher pension expenses of approximately $150 million due to a historically low discount rate on our May 31, 2012 measurement date, as well as higher depreciation costs.
The company did not specify where it plans to cut costs, except to say that it is evaluating ways to improve its margins.
FedEx and other shipping service providers are considered bellwethers for the health of the overall economy. This is the first time in two years that FedEx has reported a decline in its cargo shipment volume.