Global Trade Bellwether FedEx Cuts Outlook, CapEx Forecast, Says May Ground Aircraft

We are lucky that in the new normal earnings, cash flows, news, and broadly reality, are completely irrelevant, and all that matters is the central bank-sponsored S&P multiple expansion (due to monetary dilution), or else the news from moments ago that FedEx once more cut not only its EPS but CapEx (and thus growth spending) may have been negative for stocks, and even mentioned by assorted propaganda networks. And since none of the above will happen, here is the bottom line: FedEx – the bellwether for global trade and logistics – just cut its year EPS from $6.20-$6.60 to $6.00-$6.20, and slashed CapEx from $3.9 billion to $3.6 billion. But at least in keeping with the demands of ZIRP, the company instead of spending on growth, which is obviosuly not there, will instead buy back 10 million shares of stock. This tells you all you need to know about the “recovery.”

From the release:

 FedEx projects earnings to be an adjusted $1.90 to $2.10 per diluted share in the fourth quarter and an adjusted $6.00 to $6.20 per diluted share for fiscal 2013 before charges related to the company’s business realignment. Costs of the benefits provided under the voluntary buyout program will be recognized in the period that eligible employees accept their offers, predominantly in the fourth fiscal quarter. Including the third quarter costs, the company now expects the fiscal 2013 pretax cost of the voluntary buyout program to range from approximately $450 million to $550 million in cash expenditures, or $0.89 to $1.09 per diluted share, with some additional costs expected in fiscal 2014. Actual costs will depend on employee acceptance rates. Including the business realignment costs, earnings are expected to be $0.94 to $1.34 per diluted share in the fourth quarter and $4.91 to $5.31 per diluted share for fiscal 2013. This guidance assumes the current market outlook for fuel prices. The capital spending forecast for fiscal 2013 is now $3.6 billion, compared to $3.9 billion in the company’s previous forecast.

In last year’s fourth quarter, the company reported earnings of $1.99 per diluted share, excluding a $0.26 per diluted share non-cash aircraft impairment charge at FedEx Express. Including this charge, earnings were $1.73 per diluted share.

“Our lower-than-expected results for the quarter and reduced full-year earnings outlook were driven by third quarter international revenues declining approximately $100 million versus our guidance primarily due to accelerating customer preference for lower-yielding international services, lower rate per pound and weight per shipment,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “We expect these international revenue trends to continue. We have other actions under way beyond those already included in our profit improvement program. Some of these additional actions may involve temporarily or permanently grounding aircraft, which could result in asset impairment or other charges in future periods.”

“In early February, a number of officers and managing directors, primarily at FedEx Services and FedEx Express, accepted voluntary buyouts, and on February 15, thousands more team members were notified of their eligibility for the buyout program. This program is one of the first steps in a process that will help FedEx Express achieve necessary cost structure reductions and improved efficiency. In addition to continued profit improvements in the base businesses at FedEx Ground and FedEx Freight, our profit improvement programs are targeting annual profitability improvement at FedEx Express of $1.6 billion by the end of fiscal 2016, from the fiscal year 2013 base business. Collectively, these initiatives are expected to increase margins, improve cash flows and increase our competitiveness,” said Graf.

But what about 2022??

 

Broke US Postal Service Cuts Saturday Delivery

The completely bankrupt US Postal Service, employer of some 500,000 government workers, which for the past two quarters has been surviving on liquidity fumes even as it posted it biggest ever loss in Fiscal 2012, and which recently announced its latest stamp price hike (which bought it two extra weeks of time), has just disclosed what was long anticipated: the end of Saturday mail delivery – a crushing blow to shippers of junk mail everywhere.

From The AP:

 The financially struggling U.S. Postal Service says it plans to stop delivering mail on Saturdays, but continue delivering packages six days a week.

In an announcement scheduled for later Wednesday, the service is expected to say the cut, beginning in August, would mean a cost saving of about $2 billion annually.

The move accentuates one of the agency’s strong points — package delivery has increased by 14 percent since 2010. The delivery of letters and other mail has declined with the increasing use of email and other Internet use.

Considering the USPS loss last year was $16 billion, all the postal office needs to do to return to profitability is cut delivery on 7 more days in the week and all shall be fixed. Sadly, we are confident some government worker just read this and a lightbulb went over their head.

And no: taxing Americans $0.45 per email sent will not be a popular measure.

The “E-Mail Who Done It”: USPS Chief Lays Out Plan for the Agency’s Survival

I bet if you were a third grader, you could have figured this out, But A USPS bureaucrat, no way….

The head of the financially struggling U.S. Postal Service said the agency must be allowed to ease the terms of prepayments into a retiree health-care fund and eliminate general mail delivery on Saturday.

Patrick Donahoe told “CBS This Morning” the agency isn’t asking Congress for money.

He said, “I think most people don’t realize, we’re 100 percent self-sufficient. We pay our own way.” But the postal chief notes the agency is losing $15.9 billion this year.

Donahoe says the post office needs to refinance retirement health fund payments to $1 billion a year instead of $5 billion.

He said the Postal Service would continue package delivery on Saturday and keep post offices open. In this scenario, he says the agency could be $8 billion in the black each year.

Read more at cnbc.com …

Now become a health care and retirement plan with no business model.

From The Oblivious File

The U.S. Postal Service said its net loss last year widened to $15.9 billion, more than the $15 billion it had projected, as mail volume continued to drop, falling 5 percent.

Why are taxpayers paying for this dinosaur?

The service, whose fiscal year ends Sept. 30, lost $5.1 billion a year earlier. It announced the 2012 net loss at a meeting at its Washington headquarters.

When do taxpayers find this outrageous.

 

 

Postal Service Posts Big Loss as Cash Runs Low

ll those lavish government postal service pensions become big burden in the email era. What you think people are going to go back to paying postage instead of -e-pat?

The U.S. Postal Service on Thursday reported a $5.2 billion quarterly loss and said it was nearly out of cash and likely to exhaust its government credit line in coming months.

The agency said the loss was its widest since it began releasing quarterly financials in 2007. But Postmaster General Patrick Donahoe said the Postal Service would do whatever it takes to maintain its operations, even if that means defaulting on a second multibillion-dollar retiree obligation in as many months.

Hey Obaba man, stat aisle 7. Government pension meltdown at PO. What you gonna do when there is no market for what you sell … why bail them out, of course. Not downsize, oh the horrors of it all.

We need new Preezy. Anybody ever seen the one we got actually working?

Postal Service in Default: The Beginning of the End?

Nothing lasts forever, and the USPS is now finding that out. Benefits plans, paid by taxpayers are not a good thing, especially when they far exceed what a mere private sector worker can get.

When you go over to the Post Office, have you noticed all the laughter, from the employees in the back room? I sure have. It’s like the whole operation is turning into nothing more than a benefits program for retied workers and their healthcare program. Getting lowed under, by the sands of time.

For the first time ever, the United States Postal Service has defaulted on a payment to the Treasury.

The USPS warned of a default in a statement on Monday. It it would not make the $5.5 billion payment due today and that it would also default on a $5.6 billion payment due Sept. 30. Both of those payments are federally mandated and go toward prefunding retiree health benefits.

Basically, USPS said, this will not affect delivery or payments to employees. Benefits to retirees will also continue to flow.

The AP reports that the real problem here is that the USPS has proposed changes to its operation to handle its money problems, but they have to be approved by Congress, which, in an election year, is deadlocked on pretty much everything.

The AP spoke to Democratic Sen. Tom Carper of Delaware, chairman of the Senate subcommittee that oversees the Postal Service. Carper said in the short term, this means nothing.

Times and technology have changed; the USPS has not.

UPDATE Video:

Hey Did You Get The Text? Post Office Might Miss Retirees’ Payment

Guess what, the Post Office may default in August. Did you know? Did you get the text? Deos anyone care?

Obama is trying to use the Senate to do his dirty work, and dingy is doing his best to comply … Hey did anyone think the Post Office isn’t fixable, and now their are better way to send packages. Yep, private sector companies have replaced the Post Office. Imagine that.

The WSJ writes:

While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency’s money problems are only growing worse.

The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. Action in Congress isn’t likely, as the House prepares to leave for its August recess.

The agency said a default on the payment, for 2011, wouldn’t directly affect service or its ability to pay employees and suppliers. But “these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers,” said spokesman David Partenheimer.

The agency says it will default on its 2012 retiree health payment as well—also roughly $5.5 billion, due Sept. 30—if there is no legislative action by then.

Most everyone agrees the Postal Service needs an overhaul. It had a loss of $3.2 billion in the second quarter of this fiscal year; it is to report third-quarter results on Aug. 9. The agency blames factors including declining mail volumes and the unusual 2006 mandate by Congress that it annually set aside billions for future retirees. But while the Senate has passed legislation to overhaul the agency, the House says it doesn’t expect to take up its own proposal until after August.

Seniors For Junk Mail: Harry Reid Leads The Fight To Protect Senior Citizens’ Access To… Junk Mail

Or is this just a way to protect Democrat donors from losing the support of USPS Unions. Maybe that is the true reason for Democrats for junk mail.

The Senate Majority Leader is fighting to make sure the junk mail on which so many seniors depend doesn’t wither on the vine:

In his opening speech on Wednesday, Reid called on the Senate to quickly move forward on the passage of S. 1789, the 21st Century Postal Service Act, which restructures pension plans for Postal Service employees as well as allows the USPS to access over payments in the Federal Employee Retirement System.

“Madam President,” Reid said to Sen. Kirsten Gillibrand (D-N.Y.), the presiding officer of the Senate, “I’ll come home tonight here to my home in Washington and there’ll be some mail there. A lot of it is what some people refer to as junk mail, but for the people who are sending that mail, it’s very important.

“And when talking about seniors, seniors love getting junk mail. It’s sometimes their only way of communicating or feeling like they’re part of the real world,” Reid continued. “Elderly Americans, more than anyone in America, rely on the United States Postal Service, but unless we act quickly, thousands of post offices … will close. I’ve said this earlier today; I repeat it.”

Why am I guessing that the “junk mail” Reid is worried about being delivered to his elderly constituents are the letters from Harry Reid’s office?

And what do you think they depend on, Democrat party mailers, sent by the USPS. MAybe they could burn them to keep warm, since Democrats and Obama have made heating oil so expensive.

Don’t they do email? And Internet?