FedEx today unveiled strong double-digit growth in its Q4 and full-year results for the year endingMay 2011 thanks to higher volumes and better yields across most businesses and gave an optimistic
outlook for the coming year.In the March-May 2011 fourth quarter, FedEx Corp increased consolidated revenues by 12 percent to $10.55 billion. Its operating profit improved 28 per cent to $888 million, leaving theprofit margin at 8.4 per cent, up from 7.4 per cent the previous year. Net profits soared 33 percent to $558 million.
Revenue and earnings increased due to continued strong yield improvement in alltransportation segments and volume growth of ground and international express shipments, thecompany said. FedEx Freight’s return to profitability also improved operating results.
For the full year, FedEx Corp. revenues rose 13 per cent to $39.3 billion while operatingprofits were 19 per cent higher at $2.38 billion. Net profit was up 23 per cent at $1.45 billion.
“During fiscal 2011, an improved economy, strong customer demand and decisive actions to growour business led to increased volumes and yields across all transportation segments,” saidFrederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “With thispositive momentum, moderate economic growth and subsiding cost headwinds, FedEx is well positionedto deliver strong earnings growth in fiscal 2012.”
“Our actions to improve yields continue to drive revenue and earnings growth across ourtransportation segments,” added Alan B. Graf, Jr., FedEx Corp. executive vice president and chieffinancial officer. “FedEx Ground maintained its exceptional performance this quarter, increasingvolume, yields and margins, while FedEx Freight returned to profitability. Even with higher plannedcapital spending in fiscal 2012, margins, cash flows and returns are expected to improve year overyear.”
FedEx Express increased Q4 revenues by 13 per cent to $6.63 billion. Its operating profitimproved only four per cent to $429 million, however, and the operating margin dropped back to 6.5per cent, from 7.0 per cent the previous year. Operating income improvements were driven by strongyield growth, particularly in U.S. domestic package services, and by volume growth in IP packageand freight services. Results were negatively impacted by increased retirement plan expenses andthe reinstatement of certain compensation programs.
FedEx International Priority (IP) average daily package volume increased 6 per cent, led byexports from Asia. IP revenue per package grew 8 per cent due to higher fuel surcharges, thefavorable impact of exchange rates, improved weight per package and yield management actions. IPfreight pounds increased 13 per cent with revenue per pound up 6 per cent due to higher fuelsurcharges and the favorable impact of exchange rates. In total, IP package and freight revenueincreased 15 per cent and pounds increased 9 per cent year-over-year. U.S. domestic revenue perpackage grew 10 per cent due to higher fuel surcharges, yield management actions and increasedweight per package, with slightly lower U.S. domestic average daily package volume.
In Q4, FedEx Ground increased revenues by 15 per cent to $2.26 billion. Its operating profitimproved 31 per cent to $417 million and the operating margin rose to 18.4 per cent, up from 16.3per cent the previous year. Operating income and margin increased primarily due to higher packageyield and volume.
FedEx Ground average daily package volume grew 6 per cent in the fourth quarter driven byincreases in the business-to-business market and the FedEx Home Delivery service. Revenue perpackage increased 7 per cent primarily due to yield management actions and higher fuel surcharges.FedEx SmartPost average daily volume increased 24 per cent due to growth in e-commerce and gains inmarket share. FedEx SmartPost revenue per package increased 8 per cent primarily due to growth inhigher-yielding services and increased fuel surcharges.
FedEx Freight, the US trucking business, increased Q4 revenues by six per cent to $1.31billion. Most importantly, it moved into profit with operating income of $42 million, up from anoperating loss of $36 million a year ago. This gave the business an operating margin of 3.2 percent, compared with -2.9 per cent the previous year. Less-than-truckload (LTL) yield increased 13per cent primarily due to yield management actions and higher LTL fuel surcharges. LTL averagedaily shipments decreased 8 per cent as a result of the yield management actions.
Looking ahead, FedEx projected earnings of $1.40 to $1.60 per diluted share in the firstquarter and $6.35 to $6.85 per diluted share for fiscal 2012. This guidance assumes the currentmarket outlook for fuel prices and continued moderate growth in the global economy, the companystated. The company reported earnings of $1.20 per diluted share in last year’s first quarter.
The capital spending forecast for fiscal 2012 is $4.2 billion, which includes the delivery ofaircraft as well as progress payments toward future aircraft deliveries, along with investments infacilities, vehicles and information technology in support of the company’s global growth strategy.
