FedEx Corp. Reports fourth quarter and full year earnings
FedEx Corp. reported a loss of USD 0.78 per share for the fourth quarter ended May 31, compared to earnings of USD 1.96 per diluted share a year ago. The quarter’s results include the previously announced charge of USD 891 million (USD 696 million, net of tax, or USD 2.22 per diluted share) related predominately to one-time, non-cash asset impairment charges. These charges were associated with the decision to minimize the use of the Kinko’s trade name and a reduction in the value of the goodwill resulting from the Kinko’s acquisition. Last year’s fourth quarter included a USD 0.06 per diluted share net benefit from a settlement with Airbus related to the A380 aircraft order cancellation. Excluding these items, earnings were USD 1.45 per diluted share in the fourth quarter compared to USD 1.90 per diluted share a year ago.
Full Year Results
FedEx Corp. reported the following consolidated results for the full year:
• Revenue of USD 38.0 billion, up 8 pct from USD 35.2 billion the previous year
• Operating income of USD 2.08 billion, down 37 pct from USD 3.28 billion last year
• Net income of USD 1.13 billion, down 44 pct from last year’s USD 2.02 billion
• Earnings per share of USD 3.60, down 44 pct from USD 6.48 per share a year ago
Capital spending for fiscal 2008 was USD 2.9 billion. Fiscal 2007 results also included costs associated with upfront compensation and benefits under the new pilot labor contract at FedEx Express, which reduced second quarter earnings by approximately USD 0.25 per diluted share. Excluding the above items, earnings were USD 5.83 per diluted share for the year compared to USD 6.67 per diluted share a year ago. FedEx Corp. reported a loss of USD 0.78 per share for the fourth quarter ended May 31, compared to earnings of USD 1.96 per diluted share a year ago. The quarter’s results include the previously announced charge of USD 891 million (USD 696 million, net of tax, or USD 2.22 per diluted share) related predominately to one-time, non-cash asset impairment charges. These charges were associated with the decision to minimize the use of the Kinko’s trade name and a reduction in the value of the goodwill resulting from the Kinko’s acquisition. Last year’s fourth quarter included a USD 0.06 per diluted share net benefit from a settlement with Airbus related to the A380 aircraft order cancellation. Excluding these items, earnings were USD 1.45 per diluted share in the fourth quarter compared to USD 1.90 per diluted share a year ago.
Fourth Quarter Results
FedEx Corp. reported the following consolidated results for the fourth quarter:
• Revenue of USD 9.87 billion, up 8 pct from USD 9.15 billion the previous year
• Operating loss of USD 163 million, down from income of USD 1.01 billion last year
• Net loss of USD 241 million, down from last year’s net income of USD 610 million
Total combined average daily package volume in the FedEx Express and FedEx Ground segments grew 1% year over year for the quarter, as 6 pct growth in FedEx International Priority (IP) and FedEx Ground shipments were mostly offset by continued declines in U.S. domestic express shipments.
Fourth quarter operating results declined as a result of the Kinko’s-related charge, as well as the continued escalation of fuel prices, and the weak U.S. economy, which limited demand for U.S. domestic express and copy and print services.
Full Year Results
FedEx Corp. reported the following consolidated results for the full year:
• Revenue of USD 38.0 billion, up 8 pct from USD 35.2 billion the previous year
• Operating income of USD 2.08 billion, down 37 pct from USD 3.28 billion last year
• Net income of USD 1.13 billion, down 44 pct from last year’s USD 2.02 billion
• Earnings per share of USD 3.60, down 44 pct from USD 6.48 per share a year ago
Capital spending for fiscal 2008 was USD 2.9 billion. Fiscal 2007 results also included costs associated with upfront compensation and benefits under the new pilot labor contract at FedEx Express, which reduced second quarter earnings by approximately USD 0.25 per diluted share. Excluding the above items, earnings were USD 5.83 per diluted share for the year compared to USD 6.67 per diluted share a year ago.
Outlook
Earnings are difficult to predict in light of very volatile and high fuel prices and an uncertain economic outlook. FedEx projects earnings to be USD 0.80 to USD 1.00 per diluted share in the first quarter. This is in contrast to USD 1.58 per diluted share a year ago when crude oil averaged about USD 70 per barrel and the U.S. economy was stronger. The company is currently targeting fiscal 2009 earnings of USD 4.75 to USD 5.25 per diluted share. This guidance incorporates the current high fuel prices and the related impact on fuel surcharges, which are reducing demand for FedEx services and impacting yield across the company’s transportation segments. This outlook assumes no additional increases to current fuel prices and no further weakening in the economy.
The capital spending forecast for the year is less than USD 3 billion, which includes significant investments in more fuel-efficient aircraft.
