U.S. Productivity Climbs, FedEx Lowers Outlook

Arthi Gupta
05 Sep, 2012
New York City

U.S. indexes declined after labor productivity rose more than estimated in the second quarter. FedEx lowered first quarter earnings outlook. General Cable completed the acquisition of the North American portion of Alcan Cable for $151 million.

[R]10:00 AM New York – U.S. indexes declined after labor productivity rose more than estimated in the second quarter. FedEx lowered first quarter earnings outlook. General Cable completed the acquisition of the North American portion of Alcan Cable for $151 million.[/R]

U.S. indexes edged lower on global growth worries. However, automakers reported strong U.S. vehicles sales in August.

General Motors sales rose 10%, Ford sales gained 13% and Chrysler sales advanced 14% as industry sales increased 20% on the rise in demand for pickup and larger vehicles, according to the data released by the research firm Autodata.

Industry sales are expected to reach a 4-year high of 14.5 million units.

Investors in Europe stayed on the sideline ahead of the policy announcement from the European Central Bank tomorrow. ECB President Mario Draghi is expected to announce steps to acquire short term debt of struggling member nations in the euro zone.

European Union President Herman Van Rompuy is scheduled to meet French President François Hollande today.

Asian stocks declined and reacted for the first time after U.S. reported a decline in manufacturing for the third month in a row and construction spending was below estimates in August.

China''s service sector activity slowed in August with the headline HSBC/Markit business activity index declining to 52 in August from 53.1 in July.

The composite output index fell to 49.9 in August from 51.9 in July. The stagnation of growth reflected a renewed decline in manufacturing output and a slower expansion of service sector activity.

In addition, Australia reported slowing economic growth in the quarter to June as the nation struggles with the falling price of its largest export, iron ore. The GDP growth in the quarter declined to 0.6% after 1.4% growth in the previous quarter.

U.S. Labor Productivity Climbs

U.S. labor productivity rose more than estimated in the second quarter, according to a report released by the U.S. Labor Department today,

Non-farm business sector labor productivity increased at a 2.2% annual rate during the second quarter, reflecting increases of 2.4% in output and 0.1% in hours worked, the U.S. Bureau of Labor Statistics reported today.

Unit labor costs in nonfarm businesses increased 1.5% while hourly compensation increased 3.7% in the second quarter

General Cable Acquires Alcan Cable Unit

General Cable Corporation completed the acquisition of the North American portion of Alcan Cable for $151 million.

The company estimates that the overall Alcan Cable business will contribute approximately $650 million to $700 million in annual revenues at current aluminum prices.

Earnings Review

Dollar General Corp. ((DG)), the discount retailer reported second quarter sales increased 10.4% to $3.95 billion on same-store sales increase of 5.1%. Net income increased 47% to $214 million or 64 cents a diluted share compared to net income of $146 million or 42 cents per share, in the prior-year quarter.

FedEx Corporation ((FDX)), the parcel delivery services provider estimated first quarter earnings in the range of $1.37 to $1.43 per diluted share compared to its prior guidance of $1.45 to $1.60 a share.

Finisar Corporation ((FNSR)), the fiber-optic equipments maker said first quarter revenue fell 3.4% to $220.53 million from the same quarter last year. Net loss in the quarter swung to $6.2 million or 7 cents per diluted share compared to net income of $10.1 million or 11 cents per share for the year-ago quarter.

Francesca''s Holdings Corp. ((FRAN)), the specialty apparel and jewelry retailer reported second quarter net sales rose to $76 million compared to $51 million last year. Net income in the quarter soared to $12.7 million or 28 cents per diluted share compared to net income of $5.5 million or 13 cents per share last year.

McDonald’s Corp ((MCD)) traded flat after the fast food chain operator said it plans to open first vegetarian restaurants in India next year.

Rite Aid Corporation ((RAD)), the drugstore chain retailer reported for the five weeks ended September; same store sales increased 0.4% over the prior-year period. Total drugstore sales for the five-week period decreased 0.4% to $2.406 billion compared to the same period last year.