FedEx posts 4Q loss

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FedEx Corp. today, June 18, reported a loss of $0.78 per diluted share for the fourth quarter ended May 31, compared to earnings of $1.96 per diluted share a year ago. The quarter’s results include the previously announced charge of $891 million ($696 million, net of tax, or $2.22 per diluted share) related predominately to one-time noncash 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 $0.06 per diluted share net benefit from a settlement with Airbus related to the A380 aircraft order cancellation. Excluding these items, earnings were $1.45 per diluted share in the fourth quarter compared to $1.90 per diluted share a year ago.

“Record high fuel prices and the weak U.S. economy dampened volume growth and substantially affected our bottom line,” said Frederick W. Smith, chairman, president and chief executive officer of Memphis, Tenn.-based FedEx Corp. “Despite the challenging conditions, our team members continue their outstanding performance in support of our customers, as service levels and morale remain high. We will continue to reduce expenses to match volume and revenue expectations.”

FedEx Corp. reported the following consolidated results for the fourth quarter:

  • Revenue of $9.87 billion, up 8 percent from $9.15 billion the previous year;
  • Operating loss of $163 million, down from income of $1.01 billion last year; and
  • Net loss of $241 million, down from last year’s net income of $610 million.
  • Total combined average daily package volume in the FedEx Express and FedEx Ground segments grew 1 percent year over year for the quarter, as 6 percent growth in FedEx International Priority and FedEx Ground shipments were offset mostly 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.

    FedEx Corp. reported the following consolidated results for the full year:

  • Revenue of $38.0 billion, up 8 percent from $35.2 billion the previous year;
  • Operating income of $2.08 billion, down 37 percent from $3.28 billion last year;
  • Net income of $1.13 billion, down 44 percent from last year’s $2.02 billion; and
  • Earnings per share of $3.60, down 44 percent from $6.48 per share a year ago.
  • Capital spending for fiscal 2008 was $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 about $0.25 per diluted share. Excluding the above items, earnings were $5.83 per diluted share for the year compared to $6.67 per diluted share a year ago.

    “The operating environment for fiscal 2009 is expected to be very difficult due to the weak U.S. economy and extremely high fuel prices,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “However, we will focus on reducing expenses and remaining cashflow-positive, and will continue to take positive steps to improve the customer experience across our portfolio of services.”

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