FedEx has become the latest US company to praise President Donald Trump’s tax reform plan, saying the proposed bill could boost its full year earnings by as much as $5.50 per diluted share.
The parcel delivery group said a reduction in the main US federal corporate tax to 21 per cent from 35 per cent could increase earnings by between $4.40 to $5.50 per share for the current fiscal year, which ends on May 31.
The comments come as FedEx said the strong growth in online shopping this holiday season should help the company mitigate some of costs it incurred from the devastating cyber attack on its TNT Express unit earlier this summer.
“We are on track for another record holiday-shipping season,” said chief executive Frederick Smith.
FedEx said it now expects fiscal 2018 earnings excluding pension adjustments to come in at $11.45 to $12.05 per share. That is up from the $11.05-$11.85 a share range it gave in September when it was forced to downgrade its view in light of the cyber attack. However it remains lower than its original forecast of $12.45-$13.25 a share.
The change in guidance was given alongside FedEx’s fiscal second quarter results. For the three months to end of November, revenue was up more than 9 per cent to $16.3bn, easily topping analysts expectations of $15.7bn. Net income came in at $775m, or $2.84 a share compared to $700m or $2.59 a share in the year ago period. Adjusted for one-off items, net income was $3.18 a share, compared to expectations of $2.88 a share.
Like rival UPS, Memphis-based FedEx is benefiting from the explosive growth in online shopping, which is driving up shipping volume at both is domestic and international units. The holiday shopping season tends to be both companies’ busiest and FedEx’s positive comments helped send its shares 1.3 per cent higher in after hours trading.
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