FedEx Corp. says its latest quarterly profit rose 5 percent from a year ago despite storms that raised the company's costs, but the results were below analysts' expectations.
The company's ground-shipping segment is doing better, but the express-delivery business is flat and customers continue to shift to slower, cheaper services for international shipments.
The package-delivery giant said Wednesday that net income in the quarter that ended Feb. 28 rose to $378 million, or $1.23 per share, from $361 million, or $1.13 per share, a year ago. Analysts surveyed by FactSet expected $1.45 per share.
Revenue rose 3 percent to $11.30 billion from $11 billion, missing Wall Street's forecast of $11.43 billion.
The company expects earnings for the fiscal year that ends in May to be between $6.55 and $6.80 per share. That's also below analysts' prediction of $6.89 per share.
FedEx shares fell 32 cents to $138.25 in premarket trading before the opening bell. They closed Tuesday down 3.6 percent for this year after gaining 57 percent in 2013.
The Memphis, Tenn.-based company said that unusually severe storms hurt shipping volumes, boosted costs and lowered operating income by $125 million in the fiscal third quarter, which runs from December through February.
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"On days when the weather was closer to normal seasonal conditions, our volumes were solid and service levels were high," said Chairman and CEO Fred Smith.
Customers are limiting spending on higher-priced services. FedEx said that it was continuing to see a shift toward less profitable international services -- the volume of international economy-class shipments rose 8 percent.
FedEx is still buying back its own stock, which reduced the number of shares by 3 percent from a year ago.
