Strong fourth quarter at FedEx Corp driven by e-commerce growth
FedEx Corp had an “outstanding” fourth quarter according to its chairman, president and CEO Frederick W Smith, helping the express delivery giant to a “good” year overall. The company recorded a $11.8bn revenue for the final quarter of its 2014 fiscal year, up 3.5% from $11.4bn the same quarter last year, and above analysts’ expectations.
Operating income for the quarter rose on a reported basis from $502m to $1.18bn in the quarter, as the firm bounced back from aircraft impairment charges and restructuring costs incurred last year.
The full year saw revenue rising from $44.3bn to $45.6bn, with net income rising from $1.56bn to $2.10bn.
Growth came in all business segments, but e-commerce helped particularly drive growth in Ground services.
FedEx Express saw its revenue up slightly to $7bn in the fourth quarter, with operating income up 3% to $475m. US domestic volumes rose 3%, while international export volumes rose 2%, with the shift from premium to economy services continuing.
FedEx Ground saw its revenue up 8% year-on-year in the fourth quarter to $3.01bn on the back of e-commerce growth, with operating income up 5% to $586m. Average daily volumes grew 8% for both FedEx Ground and the e-commerce offering FedEx SmartPost, which uses USPS last mile delivery.
FedEx Freight saw its revenue up 12% year-on-year to $1.55bn, with operating income up 51% to $122m, thanks to 12% growth in daily Less-than-truckload shipments, higher weight per shipment and improved operational efficiencies.
“Commitment”
Commenting on the results, Smith paid tribute to his staff, saying: “I would like to extend my sincere appreciation to the entire FedEx team for their contribution to our results and their continued commitment to providing outstanding service to our customers and connecting people and possibilities around the world.”
Looking ahead, FedEx said it was expecting 2015 to be even better than 2014, and was increasing its capital spending to $4.2bn, to include more aircraft deliveries as part of its fleet modernisation programme, and a continued expansion of the Ground network.
Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer, said: “With continued modest economic improvement, our results in fiscal 2015 should benefit from base performance improvement and ongoing execution of our profit improvement initiatives at FedEx Express, continued profitable growth at FedEx Ground and FedEx Freight, and our share repurchase program. We remain committed to improving earnings, cash flows, returns on invested capital and returns to shareowners, with the most recent example of the latter being our announced 33% increase in the quarterly dividend.”
