FedEx 4Q profit rises on growth in ground shipping

DALLAS — The boom in online shopping may be hurting some store-based retailers, but it is doing wonders for FedEx Corp.

The package-delivery giant said Wednesday that its fiscal fourth-quarter profit rose sharply thanks to the growth in e-commerce, which is boosting FedEx's ground-shipping business at a time when its core express-delivery segment is flat.

FedEx's earnings of $2.46 per share beat Wall Street's forecast by a dime. Revenue also topped expectations.

The shares jumped $6.54, or 4.7 percent, to $146.85 in midday trading.

CEO Fred Smith said the "outstanding" fourth quarter capped a solid year and put the company in strong position for the new fiscal year, which ends in May 2015. FedEx said that it would earn between $8.50 and $9 per share in the new year. That is in line with analysts' average expectation of $8.74, according to FactSet.

Cowen and Co. analyst Helane Becker said the company's forecast was a plus after Wall Street had grown more cautious about management's outlook in recent weeks.

The Memphis-based company said that it earned $730 million in its fiscal fourth quarter, which ended May 31, compared with $303 million a year ago, when write-downs weighed on the results. Excluding items, FedEx would have earned $2.13 per share in last year's fourth quarter.

Revenue rose 3.5 percent to $11.84 billion. Analysts surveyed by FactSet expected $11.66 billion.

Revenue in the ground-shipping business grew 8 percent, helped by gains in e-commerce. That helped offset slower growth in FedEx Express, which accounts for more than half the company's revenue.

FedEx's revenue per package on ground shipments rose 2 percent because of rate increases and surcharges on residential deliveries. The same statistic was flat for U.S. deliveries in the key express business.

Last month, FedEx announced that it will start charging more for large but light packages that take up space in its delivery trucks and add to costs. That includes bulky products that consumers buy online instead of in stores. Rival United Parcel Service Co. said Tuesday that it would do the same by considering a bulky package's dimensions and not just its weight in setting prices for ground shipments.

FedEx executives said they couldn't estimate how much the change might raise with the change in pricing. Although customers will pay more to ship bulky boxes, they could avoid some of the increase by packing items in smaller boxes than they use now.

"If you have received any kind of packages at your home, whether they are cookies from grandma or an e-commerce package, they're not always packed efficiently," said Mike Glenn, the company's executive vice president of market development.

The latest results marked an improvement over FedEx's third quarter, when the company was slowed by winter storms that raised costs and cut into shipping volumes. They also indicated that that while e-commerce continues to boost the ground-shipping business, international priority delivery remains flat as customers keep shifting to slower, cheaper services.

Separately, FedEx confirmed that it has received allegations about potential violations of U.S. anti-bribery law but hasn't been able to verify them. The Wall Street Journal reported that FedEx had been told of claims that its Kenya operation paid bribes to government officials.

In a statement to The Associated Press, the company said it received the allegations in December and began investigating immediately with a U.S. law firm and external auditors in East Africa. The company said that it notified the Justice Department and the Securities and Exchange Commission shortly after hearing of the allegations.

"FedEx has not found anything to substantiate the allegations, but the investigation is ongoing," the company said.

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Mainers paying $99 in monthly premium on exchange

AUGUSTA, Maine — Mainers who signed up for health care coverage on the federally-run exchange are paying an average of $99 per month in premiums.

The U.S. Department of Health and Human Services figures released Wednesday show that 89 percent of Mainers who signed up on the exchange selected plans that the federal government helps pay for with tax credits.

Nationally, people are paying an average of $82 in premiums after subsidies on the exchange.

The department said that the average monthly premium in Maine before subsidies was $443 and fell 78 percent with the subsidy.

The average tax credit for Maine plans was $344 a month. Mainers who chose silver plans paid an average of $87.

More than 44,000 Mainers signed up on the exchange during the open enrollment period.

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Sustainable energy hub for Asia launched

MANILA, Philippines — The Asian Development Bank and two U.N. agencies launched a hub Wednesday to mobilize investments and innovation to bring clean energy to the Asia Pacific region, where more than 600 million people lack electricity and 1.8 billion use firewood and charcoal at home.

Energy demand is soaring in the region on the back of economic and population growth, and the ADB said that by 2035 developing countries in the region will account for 56 percent of global energy use, up from 34 percent in 2010. They will need more than $200 billion in energy investments by 2030.

ADB will host and manage the Sustainable Energy for All hub — one of three such regional hubs under an initiative of U.N. Secretary General Ban Ki-Moon. The U.N. Economic and Social Commission for Asia and the Pacific and the U.N. Development Programme are ADB's partners.

"We can overcome energy poverty through sustainable, low-carbon energy means, and through this new hub we are gathering together investors, innovators and experts to make this happen," said ADB Vice President Bindu Lohani.

One of the goals of the center is to support developing Asian countries in preparing country action plans to meet the U.N. targets of ensuring universal access to modern energy by 2030, and doubling both the global rate of improvement in energy efficiency and the share of renewable sources of energy like solar or wind power.

Kandeh Yumkella, Ban's special representative on sustainable energy, called for an energy revolution that will power an industrial revolution that creates jobs and wealth in a sustainable way. He urged policy makers to ensure that public policies have transparency, longevity and credibility to lessen risks that will dampen needed investments in energy.

Finding innovative solutions to energy poverty can save lives, because 3.3 million deaths in Asia annually are associated with inhaling toxic fumes from wood, charcoal, coal or dung, said Caitlin Wiesen, Asia-Pacific regional manager of UNDP.

The world needs a staggering amount of investments in energy for the next two decades equivalent to half of the global economy to meet the U.N. goals, said Christoph Frei, secretary general of the World Energy Council composed of 3,000 private and government organization in 90 countries.

He said it is important to address political risks that come when there is a lack of balance in policies and the objectives of attaining energy security, environmental security and social equity. Investing in diverse sources of energy also cuts risks, he added.

By 2050, Frei said, solar power and gas are expected to have a dramatic growth rate as a source of energy while fossil fuel that currently contributes 80 percent of the world's source of power will have its share down to between 60 and 70 percent. Oil is seen to stagnate while there is uncertainty with regard to the growth or decrease in the use of coal.

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Germany's Merkel: no need to loosen euro rules

BERLIN — German Chancellor Angela Merkel is making clear she won't back changes to the 18-nation eurozone's budget deficit rules after her deputy signaled greater flexibility.

Vice Chancellor Sigmar Gabriel, who criticized Germany's austerity-led approach before his party joined Merkel in government in December, suggested in France this week that countries committing to reforms could get more time to reduce budget deficits.

Some interpreted that as a call to loosen rules requiring that deficits be kept below 3 percent of gross domestic product, which could benefit countries such as France or Italy.

Merkel said she and Gabriel agreed Wednesday that "there is no need to change the stability pact," as the budget rules are called. She said it already contains "everything we need in terms of flexibility to overcome the problems."

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Delta says sorry for tweet linking Ghana, giraffe

ATLANTA — Delta Air Lines Inc. apologized Tuesday for a tweet meant to congratulate the U.S. soccer team for its win over Ghana but which critics said was ignorant or offensive.

Delta gave the tweet the equivalent of a referee's red card: The airline pulled the post after criticism on social media.

Monday's tweet had the final score of the World Cup game, 2-1. It showed the Statue of Liberty to represent the U.S., and used a giraffe to symbolize Ghana.

But giraffes aren't native to Ghana, a West African country with more than 25 million people.

In a statement on its website, Delta said that the tweet "was both inaccurate and inappropriate."

Atlanta-based Delta, which has nearly 690,000 followers on Twitter, said that it is reviewing its procedures "to ensure that future images and posts reflect both our values and our global focus." A spokeswoman said that no one had gotten in trouble for the tweet.

According to its website, Delta flies to Accra, Ghana, from Kennedy Airport in New York.

Delta is not the first company to stumble on social media.

In April, US Airways apologized after accidentally tweeting a picture of a naked woman to a customer who had complained about a delayed flight. The employee was not punished for what a spokesman called an honest mistake. Chrysler, Home Depot and others have also apologized after tweets that drew criticism.

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Stocks waver in early trade ahead of Fed decision

U.S. stocks are little changed in early trading as investors wait for the latest policy action from the Federal Reserve.

FedEx rose 5 percent after the package delivery service reported that its income rose as growth in online shopping gave its ground-shipping business a lift.

Food maker ConAgra slumped 7 percent after predicting lower profits.

Later Wednesday the Fed will release its latest policy statement following a two-day meeting. Investors expect more cuts to its economic stimulus.

The Dow Jones industrial average was little changed at 16,808 points in early trading.

The Standard & Poor's 500 index rose two points, or 0.1 percent, to 1,944. The Nasdaq composite was unchanged at 4,336.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.63 percent.

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Social Security closes offices as baby boomers age

WASHINGTON — Even as millions of baby boomers approach retirement, the Social Security Administration has been closing dozens of field offices, forcing more and more seniors to seek help online instead of in person, according to a congressional report being released Wednesday.

The agency blames budget constraints.

As a result, seniors seeking information and help from the agency are facing increasingly long waits, in person and on the phone, the report said.

Social Security has closed 64 field offices since 2010, the largest number of closures in a five-year period in the agency's history, according to a report by the bipartisan staff of the Senate Special Committee on Aging. In addition, the agency has closed 533 temporary mobile offices that often serve remote areas.

Hours have been reduced in the 1,245 field offices that are still open, the report said.

The report questions the agency's criteria for choosing which offices to close, saying the impact on local communities is rarely taken into account.

"Seniors are not being served well when you arbitrarily close offices and reduce access to services," said Sen. Bill Nelson, D-Fla., chairman of the Aging Committee. "The closure process is neither fair nor transparent and needs to change."

The committee is holding a hearing on the report Wednesday afternoon. A Social Security official is scheduled to testify. On Tuesday, the agency released a short statement on the report.

"We appreciate the Senate Aging Committee's report on service delivery issues and the tough choices we have had to make because of budget constraints," the statement said. "We just received the report this morning and have begun reviewing its findings and recommendations. We will respond to the committee when that analysis is complete."

The closings come as applications for retirement and disability benefits are soaring, a trend that will continue as aging baby boomers approach retirement.

More than 47 million people receive Social Security retirement benefits, nearly a 20 percent increase from a decade ago. About 11 million people receive Social Security disability benefits, a 38 percent increase from a decade ago.

The Social Security Administration has been encouraging people to access services online. The agency has upgraded its website in recent years, including secure connections to access confidential information. People can apply for benefits without ever visiting Social Security offices.

In 2013, nearly half of all retirement applications were filed online, the report said.

But the committee report notes that many older Americans lack access to the Internet or might not be comfortable using it to apply for benefits.

Last year, more than 43 million people visited Social Security field offices, the report said. About 43 percent of those seeking an appointment had to wait more than three weeks, up from just 10 percent the year before, the report said.

Wait times on the phone have increased, too — for those who get through. This year, the agency projects that 14 percent of callers to a toll-free help line will get a busy signal. Those who get through wait on hold for an average of 17 minutes, the report said.

The union that represents field office employees is calling for a moratorium on office closures.

"Despite extraordinary efforts to reduce field office traffic, there has been no significant change over time," Witold Skwierczynski, president of the National Council of Social Security Field Operations Locals, said in written testimony to the Senate committee.

"People simply want and need to discuss the complex issues that surround this program with someone who has the training and expertise to help," Skwierczynski said.

People can get information about Social Security, Medicare and Supplemental Security Income at the field offices. They can apply for benefits and get information to help them decide when to apply. They can address more complicated issues such as fraud.

Visitors can also get documents verifying their benefits or Social Security numbers, though these services are scheduled to be eliminated at field offices later this year. People sometimes need the information quickly to apply for jobs or to verify income when applying for other government benefits, the report said.

"There are many, many instances where the case may be too complicated to be resolved simply by going online," said Sen. Susan Collins of Maine, the top Republican on the Aging Committee. "Far too many seniors throughout our nation, particularly those living in rural areas, might not have access to a computer or the Internet. It is critical that SSA take into account these issues and the effect on the community before eliminating services."

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

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Trial begins for former hedge fund owner's brother

NEW YORK — A prosecutor in the New York insider trading trial of an imprisoned hedge fund owner's brother says the pair teamed up to cheat ordinary investors.

The prosecutor's opening statements about Rengan Rajaratnam (RING'-an rah-juh-RUHT'-nuhm) were countered by a defense lawyer, who said the brothers were very different and didn't share inside information.

The brother, Raj Rajaratnam (rahj rah-juh-RUHT'-nuhm), is the founder of the Galleon Group of hedge funds and a onetime billionaire. He is serving an 11-year sentence for making up to $75 million illegally.

The charges against Rengan Rajaratnam are an extension of charges against his brother and two dozen defendants who pleaded guilty or were convicted.

Prosecutors made extensive use of wiretaps in an insider trading case for the first time during the federal investigation.

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US stocks drift lower ahead of Fed meeting

Financial markets inched lower in early trading Wednesday as investors sifted through a batch of mixed corporate earnings and awaited the Federal Reserve's latest policy update and outlook on the economy.

KEEPING SCORE: The Standard & Poor's 500 index slipped one point, or 0.1 percent, to 1,940 as of 11:24 a.m. Eastern Time. The Dow Jones industrial average fell 47 points, or 0.3 percent, to 16,761. The Nasdaq composite declined six points, or 0.1 percent, to 4,331.

FED SPEAKS: The Fed's policymaking committee caps a two-day meeting Wednesday afternoon with a statement outlining the central bank's plans and updating its economic forecasts. Fed officials were widely expected to approve a fifth cut in the Fed's monthly bond purchases because the job market has steadily strengthened. No clear signal is expected on when the Fed will start raising short-term interest rates from record lows.

INFLATION IMPACT? Some market watchers have speculated that a sharp rise in consumer prices last month might compel the Fed to ease back faster on its economic stimulus efforts. But Uri Landesman, president of Platinum Partners, doesn't see that happening.

"You're going to need more data than that to take what has been an ultra-accomodative Fed and make them a little less supportive," he said.

SHIP SHAPE: FedEx gained $6.43, or 4.6 percent, to $146.76 in morning trading after the company reported that its quarterly profit rose as growth in online shopping gave its ground-shipping business a lift. Earnings and revenue both topped Wall Street's expectations.

SECTOR VIEW: Seven out of the 10 sectors in the S&P 500 were in the red, with telecommunications stocks down the most. Utilities led the gainers.

UNAPPETIZING FORECAST: Food maker ConAgra slashed its fourth-quarter earnings outlook, citing slumping sales for its consumer foods segment, as well as weak profits for its private brands unit. The stock sank $2.27, or 6.8 percent, to $30.61.

REST UNEASY: Shares in La-Z-Boy slumped in early trading, a day after the furniture seller posted weaker than expected fourth-quarter earnings and lower sales. The stock shed $2.09, or 8.4 percent, to $22.75.

OVERSEAS: World stocks were muted. Germany's DAX rose 0.2 percent while France's CAC-40 fell 0.1 percent. The FTSE 100 index of leading British shares added 0.2 percent. In Asia, most benchmarks ended lower, except in Japan, where the Nikkei 225 rose 0.9 percent as the dollar strengthened 0.1 percent to 102.25 yen.

BONDS: The yield on the 10-year Treasury note fell to 2.64 percent from 2.65 late Tuesday.

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H&M sees rise in second quarter profit, sales

STOCKHOLM — Swedish clothing retailer Hennes & Mauritz AB says its second-quarter earnings rose 25 percent as online expansion and new store openings boosted sales.

Net profit in the March-May period was 5.81 billion kronor ($870 million), up from 4.66 billion kronor in the same period a year earlier, clearly beating analyst expectations. Sales rose 20 percent to 37.8 billion kronor.

H&M said Wednesday it plans to open 375 new stores in total this year, an extended shoe range and up to 10 new online markets in 2015.

Rapid expansion lead to a rise of 16 percent in sales and administrative costs in comparison with the previous year, boosted mainly by investments into the company's IT and online systems.

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