FedEx posts 4Q net loss of $876 million

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FedEx Corp. on Wednesday, June 17, reported the following consolidated results for the fourth quarter:

  • Revenue of $7.85 billion, down 20 percent from $9.87 billion the previous year;
  • Operating loss of $849 million, compared to an operating loss of $163 million;
  • Net loss of $876 million, down from a net loss of $241 million;
  • Loss per share of $2.82, down from a loss of $0.78 per share; and
  • Excluding the impact of impairment and other charges from both years, earnings per share were $0.64, down from $1.45.
  • These charges approximate $1.2 billion ($1.1 billion noncash), resulting primarily from the impairment of goodwill related to the acquisitions of Kinko’s Inc. (now known as FedEx Office) and Watkins Motor Lines (now known as FedEx National LTL). These impairment charges reflect a decline in the current fair value of these companies in light of economic conditions and their recent and forecasted performance. The quarter also included costs from actions to align the company’s networks to better match demand by removing equipment and facilities from service and reducing personnel.

    “FedEx operations performed well even with strong economic headwinds, thanks to decisive management actions to control costs and committed team members who delivered outstanding service to our customers,” said Frederick W. Smith, chairman, president and chief executive officer of FedEx Corp., based in Memphis, Tenn. “There are signs that the worst of the recession is behind us, and we remain optimistic that we will see quarter-over-quarter economic improvement later this calendar year.”

    In addition to the impairment and other charges, operating performance continues to be restrained by the global recession, which is resulting in lower shipment volumes at FedEx Express and FedEx Freight, as well as a competitive pricing environment. Revenue also was impacted negatively by reduced fuel surcharges and lower shipment weight. Revenue declines were offset partially by stringent cost-control efforts and share gains in the parcel market.

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

  • Revenue of $35.5 billion, down 6 percent from $38.0 billion the previous year;
  • Operating income of $747 million, down 64 percent from $2.08 billion;
  • Net income of $98 million, down 91 percent from $1.13 billion;
  • Earnings per share of $0.31, down 91 percent from $3.60 per share; and
  • Excluding the impact of fourth-quarter impairment and other charges from both years, earnings per share were $3.76, compared to $5.83.
  • “The operating environment for our first two quarters in fiscal 2010 is expected to be extremely difficult,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “Manufacturing activity is expected to be substantially negative year over year through the summer, and last year’s first-quarter results benefited from stronger economic activity, making earnings comparisons difficult. Also, the recent runup in fuel prices will have a significant negative impact on our first-quarter results. At this time, we do not have enough visibility into the economic recovery and jet fuel prices to provide a meaningful annual earnings forecast. However, we believe that FedEx will be poised for growth in our fiscal second half as our many cost-saving initiatives gain traction and the economy begins to improve.”

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