News Column

FedEx Quarterly Profit Drops

June 19, 2013
FedEx truck

Earnings at FedEx dropped 45 percent for the Memphis-based company's fourth quarter, compared with last year, after accounting for the costs of "business realignment" and retiring aircraft, the company announced Wednesday.

Meanwhile, FedEx reported that 3,600 employees accepted previously announced buyout offers that are key to its business realignment and profitability plans. The workers will be leaving in phases that began May 31, the end of the company's fourth quarter and fiscal year, with 40 percent, or about 1,440, departing the company.

The company reported earnings of $303 million for the fourth quarter, down from $550 million for the quarter in 2012, after subtracting charges of $313 million for its business realignment program and $63 million for retiring 10 aircraft and engines announced earlier this month.

Without the realignment and aircraft charges, the adjusted earnings per share was $2.13, compared with a $1.99 per share for the adjusted earnings for last year's fourth quarter. With the charges, earnings per share were 95 cents per share, compared with $1.73 after a 26-cent per share aircraft charge for the quarter last year.

For its fiscal 2013 year, the company reported net income of $1.56 billion, compared with $2.03 billion for 2012.

While FedEx Ground and FedEx Freight saw margins grow, "tepid" economic growth and a customer preference for cheaper international services challenged FedEx in 2013, the Memphis-based company's chairman, president and CEO, Frederick W. Smith, said in a statement.

FedEx "guidance" for fourth-quarter earnings was $1.90 to $2.10 per diluted share and $6 to $6.20 per share for the 2013 fiscal year.

Revenue for 2013 was $44.3 billion, up fro m $42.7 billion the previous year.

"FedEx Ground posted another strong year and FedEx Freight margins continued to improve," Smith said. "These positive developments did not fully offset tepid economic growth and customer preference for less costly international services. FedEx Express results improved in the fourth quarter, and while near-term challenges remain and we are confident we are positioning FedEx for profitable, long-term growth."

The company reported operating income of $2.55 billion for 2013, compared with $3.19 billion the previous year, or adjusted operating income of $3.21 billion in 2013 and $3.28 billion the previous year.

It reported an operating margin of 5.8 percent in 2013, compared with 7.5 percent in 2012, or adjusted operating margins of 7.3 percent for 2013 and 7.7 percent for 2012.

For its fiscal 2014 year, FedEx the company projected earnings per share growth of 7 percent to 13 percent compared with 2013. Capital spending for 2014 is projected to be about $4 billion, and the company is "revising its earnings guidance practices to focus on full fiscal year projections with quarterly updates."


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Source: (c)2013 The Commercial Appeal (Memphis, Tenn.) Distributed by MCT Information Services


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