FedEx to cut staff after weak earnings
FedEx Corp. delivered a disappointing earnings report Tuesday and said it plans to offer buyouts to some of its workers and reduce spending to make up for weak international shipping, especially in Europe.
The Memphis-based company said it had a fiscal second-quarter profit of $935 million, or $3.51 per share. That’s up $775 million, or $2.84 per share, a year ago.
But the 11 analysts surveyed by Zacks Investment Research were expecting earnings of $4.05 per share.
“While the U.S. economy remains solid, our international business weakened during the quarter, especially in Europe,” said FedEx chairman and CEO Fred Smith. “We are taking action to mitigate the impact of this trend through new cost-reduction initiatives.”
The package delivery company said it expects to record a charge related to buyouts for its U.S. employees between $450 million and $575 million in its fiscal fourth quarter. FedEx says the buyouts should save it between $225 million and $275 million annually.
FedEx expects to deliver a record number of packages again this year during the peak holiday season as online shopping continues to grow.
The company reported revenue of $17.82 billion in the period, exceeding Wall Street forecasts. Nine analysts surveyed by Zacks expected $17.71 billion.
FedEx expects full-year earnings in the range of $15.50 to $16.60 per share. Analysts had been expecting $16.31 a share, according to FactSet.
Court to get update on sale of Bellefonte
A federal judge in Alabama has set a status conference for Thursday to get an update and possible schedule for hearing a legal challenge to the decision last month by the Tennessee Valley Authority to scrap plans to sell one of America’s last unfinished nuclear plants with a pending construction permit.
Former Chattanooga developer Franklin L. Haney, who agreed two years ago to buy the unfinished Bellefonte Nuclear Power Plant from TVA for $111 million, is suing TVA for not completing the sale on Nov. 30.
TVA contends that such a sale was not allowed, and Haney’s Nuclear Development LLC didn’t meet the terms of the contract, because the transfer of a construction permit for Bellefonte was not approved by the U.S. Nuclear Regulatory Commission. TVA began work on Bellefonte and obtained a construction permit in the 1970s, although construction was halted on the plant in 1988 when power demand slowed and the cost of completing the plant rose more than originally forecast.
Haney submitted a request to the Nuclear Regulatory Commission in November for the transfer of the construction permit, but regulators are still reviewing the application.
TVA spokesman Jim Hopson said Tuesday that “”Nuclear Development’s lack of diligence in pursuing their obligation to meet the requirements of the Atomic Energy Act after the nearly 25 months of their purchase contract did not make granting an additional extension in the best interest of those we serve.”
Hopson said TVA hasn’t yet filed a formal response to Haney’s lawsuit “but will respond before the court’s deadline,” likely in 2019.
Hixson First Watch aids Siskin Institute
First Watch, which opened this month in Hixson, raised $8,000 during its grand opening celebration for the Siskin Children’s Institute.
The new restaurant on Highway 153 is open for breakfast and lunch and asked those invited for its opening on Dec. 8-9 to make a donation to Siskin in lieu of paying for their meal. The donations were matched by the Knoxville-based Capstone Concepts, LLC, the franchisee of First Watch in Chattanooga, Knoxville, and Johnson City.
“We are honored to be able to partner with such an impactful and reputable organization,” said James Baker, general manager of First Watch Hixson. “It would not have been as successful without our team and the Siskin team working in unison to put this event together for the children of our community.”
Mexico doubles minimum wage rate
Mexico’s new government is increasing minimum wages across the country by 16 percent and doubling the minimum wage in a narrow stretch of territory along the border with the United States.
President Andres Manuel Lopez Obrador says the minimum wage had lost 70 percent of its purchasing power over the last three decades following devaluations and economic crises.
The minimum is currently equivalent to $4.40 per day, and will rise to $5.10 in January.
But in the townships on the northern border, the wage will rise to $8.80.
Lopez Obrador said Tuesday employers will be able to pay the higher wages because the value-added tax will be cut in half in the border zone.
The value-added tax will remain at 16 percent in the rest of the country.