FEDEX SEES DROP IN 4TH-QUARTER, FISCAL YEAR EARNINGS
FedEx Corp. said Thursday its fiscal fourth-quarter net income fell 54 percent to $113 million, as the Memphis based express giant sought to cut expenditures and improve cash flow during the recent economic downturn.
The fourth-quarter results included $124 million of primarily non-cash charges that reduced operating income 48 percent to $223 million. Those charges included $102 million at FedEx Express to scale back the conversion of MD10 aircraft and write off the Ayres Loadmaster development program. An additional $22 million was incurred with the reorganization of operations at FedEx Supply Chain Services.
Fourth quarter revenue rose 6 percent to $5.12 billion.
For the fiscal year ended May 31, FedEx's net income was down 15 percent to $688 million on revenue of $19.6 billion, up 8 percent. Operating income fell 12 percent to $1.07 billion.
'Continuing weak economic conditions, particularly in the high-tech and durable goods sectors, sharply reduced demand for our express services,' said Alan B. Graf Jr., executive vice president and chief financial officer.
FedEx Express, the express unit, saw operating income fall 53 percent to $159 million, due to the $102 million charge. Revenue declined 3 percent to $3.85 billion. The unit saw domestic average daily volume decline 67 percent.
The unit 'was hindered by excess network capacity during a period of declining demand, particularly from existing customers,' said David J. Bronczek, president and chief executive officer of FedEx Express.
FedEx Ground, the small-package ground delivery service, saw income fall 20 percent to $56 million on revenue of $583 million, up 6 percent. Operating income was impacted by $10 million in incremental losses from the operation and expansion of the company's FedEx Home Delivery service and rebranding expenses. Daily package volume increased 50 percent from the third quarter. For the fiscal year, FedEx Home Delivery incurred a $52-million loss as coverage was expanded to about 70% of the United States.
FedEx Freight, the less-than-truckload unit created from the merging of American Freightways and Viking Freight, reported operating income of $37 million on revenue of $499 million.
Graf said that FedEx Corp. projects first-quarter earnings will be 'around the low end of the current range of analysts' estimates.'