FedEx reveals “strong” Q4 results
FedEx Corp has reported a Q4 revenue of $9.43bn – up 20% from the previous year. The company said operating income was $696m, up from an operating loss of $849m last year. Results showed an operating margin of 7.4%, up from (10.8%) the previous year, whilst a net income of $419m, up from last year’s net loss of $876m, was recorded.
The company reported earnings of $1.33 per diluted share for the fourth quarter ended May 31. Last year, the company reported a fourth quarter loss of $2.82 per diluted share, including $3.46 per diluted share of charges resulting primarily from the impairment of goodwill and aircraft. Excluding these charges, fourth quarter earnings were $0.64 per diluted share a year ago.
“FedEx delivered strong results in our fourth quarter, thanks to sequential growth in package volume and our ability to leverage our unique global networks to take advantage of a recovering economy,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “We ended our fiscal year a stronger company, and I am confident FedEx is very well positioned for future revenue and earnings growth.”
Full year results
FedEx Corp. reported the following consolidated results for the full year:
-Revenue of $34.7bn, down 2% from $35.5bn the previous year
-Operating income of $2.0bn, up from $747m last year
-Net income of $1.18bn, up from last year’s $98m
-Earnings per share of $3.76, up from $0.31 per share a year ago
Capital spending for fiscal 2010 was $2.8bn, with $1.5bn of investments largely related to more fuel-efficient aircraft, including the delivery of six Boeing 777Fs for use in the international network and 12 Boeing 757s.
Outlook
FedEx projects earnings to be $0.85 to $1.05 per diluted share in the first quarter and $4.40 to $5.00 per diluted share for fiscal 2011. This guidance assumes the current market outlook for fuel prices and a continued moderate recovery in the global economy. The company reported earnings of $0.58 per diluted share in last year’s first quarter. The capital spending forecast for fiscal 2011 is $3.2bn, which includes the expected delivery of six Boeing 777Fs and 16 Boeing 757s, along with investments in information technology, vehicles and facilities in support of the company’s global growth strategy.
“We expect continued improvement in both revenue and earnings in fiscal 2011,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “Resumed growth in industrial production and global trade is increasing demand for our transportation services, and yield management remains a top priority across all of our operating companies. However, we expect the growth in earnings in fiscal 2011 to be constrained by significant increases in fixed pension and volume-related aircraft maintenance expenses, along with higher anticipated healthcare costs. In addition, our earnings guidance includes increased costs related to the planned reinstatement of various employee compensation programs.”
The company expects pension and retiree medical expenses to increase approximately $260m year over year due to a lower discount rate. However, cash contributions to U.S. pension plans are expected to decline from approximately $850m in fiscal 2010 to approximately $500m in fiscal 2011.
“We remain fully focused on improving yields, margins, returns and cash flow. Our cash flow from operations was sufficient to fund our fiscal 2010 capital investments and we expect this to be the case again in fiscal 2011,” said Graf.
