FedEx Corp. reported earnings of $2.13 per diluted share for the fourth quarter ended May 31. This excludes a $0.98 per diluted share business realignment program charge and a previously announced $0.20 per diluted share noncash aircraft impairment charge at FedEx Express. Including these charges, fourth quarter earnings were $0.95 per diluted share. Last year’s fourth quarter earnings were $1.99 per diluted share, excluding a $0.26 per diluted share noncash aircraft impairment charge at FedEx Express. Including last year’s charge, earnings were $1.73 per diluted share.
“FedEx Ground posted another strong year and FedEx Freight margins continued to improve,” said Frederick W. Smith, FedEx Corp. chairman, President and Chief Executive Officer. “These positive developments did not fully offset tepid economic growth and customer preference for less costly international shipping services. FedEx Express results improved in the fourth quarter, and while near-term challenges remain, we are confident we are positioning FedEx for profitable, long-term growth.”
Fourth Quarter Results
FedEx Corp. reported revenues of $11.4 billion, operating income of $502 million and net income of $303 million for the fourth quarter of this fiscal year, compared with revenues of $11.0 billion, operating income of $856 million and net income of $550 million for the fourth quarter of the fiscal year ended May 31, 2012.
For the full year ended May 31, 2013, FedEx Corp. reported net income of $1.56 billion on revenues of $44.3 billion, compared with net income of $2.03 billion on revenues of $42.7 billion.
Business Realignment Program Update
In October, the company announced profit improvement programs, which include a voluntary employee separation program. The program was completed during the fourth quarter, and approximately 3,600 employees will be voluntarily leaving the company in phases to ensure a smooth transition. Approximately 40 per cent of the employees vacated their positions on May 31, 2013 in the first phase. Approximately 25 per cent of the employees will vacate their positions in the final phase at the end of fiscal 2014. The company incurred costs of $496 million during the fourth quarter and $560 million during fiscal 2013, associated with the business realignment activities.
FedEx is revising its earnings guidance practices to focus on full fiscal year projections with quarterly updates. For fiscal 2014, the company projects earnings per share growth of seven to thirteen per cent from fiscal 2013 adjusted results. This assumes the current market outlook for fuel prices, U.S. GDP growth of 2.3 per cent and world GDP growth of 2.7 per cent. Capital spending for fiscal 2014 is expected to be approximately $4 billion.
“We remain focused on improving margins and returns in all of our businesses. The pace of that improvement is expected to be moderate in fiscal 2014 and then accelerate in fiscal 2015,” said Alan B. Graf, Jr., FedEx Corp. Executive Vice-President and Chief Financial Officer. “Our profit improvement program is progressing, but we continue to see the effects of customers selecting lower-rate international services. FedEx Express will further decrease capacity between Asia and the United States in July.”