World’s largest logistic company, FedEx Corp. (NYSE: FDX) said on Wednesday that its fiscal fourth-quarter income fell 45% as continued weakness in the international package volume, restructuring charges and higher operating expenses, weighed on the bottom line.
Shares edged higher in early trade as adjusted earnings edged past street’s estimate. However, the company expects some headwinds in the new fiscal year, citing tepid macroeconomic environment.
For the new fiscal year, FedEx expects adjusted earnings to grow 7% to 13% while analysts surveyed by Thomson Reuters were expecting 21% gain.
Commenting over the cautious outlook, FedEx Chief Financial Officer, Alan B.Graf Jr. said to analysts during a conference call, “The pace of that improvement is expected to be moderate in fiscal 2014 and then accelerate in fiscal 2015.”
“Our profit improvement program is progressing, but we continue to see the effects of customers selecting lower-rate international services,” added the CFO.
For the fiscal fourth quarter ended May 31, the Memphis TN based company reported net income of $303 million or 95 cents a share compared to a profit of $550 million or $1.73 a share, in the same quarter of last year.
Adjusting onetime items such as aircraft impairment and restructuring charges, the Company earned $2.13 a share up from $1.99 a share, in the year-earlier quarter.
Earlier, FedEx projected non-GAAP (adjusted) earnings to come in the range of $1.90 to $2.10 a share.
Analysts’ consensus estimate was for earnings of $1.96 a share.
Revenue increased 3.6% to $11.4 billion, a tad short of analysts’ consensus estimate, which was for $11.44 billion, according to a data compiled by Thomson Reuters.
Operating margin contracted to 4.4% from7.8%, in the same period of last fiscal year.
Revenue from the express-shipping segment, which accounts for the bulk of the top line, rose 3% to $6.98 billion while operating profit in this segment increased by 11%. Daily package volume increased 2% in the U.S. while it fell 2% in the international market.
Revenue from the ground shipping segment climbed 12% to $2.78 billion. While operating profit jumped 13%, the average daily volume rose 10%, aided by increase in the market share and growing e-commerce business.
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