FedEx Reports 4Q Profit That Beats Expectations
Buoyed by growth across its operating units, FedEx Corp. reported increases in revenue and profit for its fiscal fourth quarter and full-year 2018.
“It was a year of opportunities and challenges, anticipated and unexpected, and FedEx emerged more competitive than ever,” said FedEx Chairman and CEO Fred Smith during a June 19 conference call with journalists and Wall Street analysts.
For the fourth quarter, FedEx reported net income rose 10.8% to $1.13 billion from $1.02 billion a year ago. Diluted earnings per share rose to $4.15 from $3.75 a year ago. For the quarter, net revenue rose 10.2%, to $17.3 billion from $15.7 billion in 4Q 2017.
The company attributed the quarterly gains to increased volume, higher base rates and the favorable net impact of fuel in each of its transportation segments. It noted, however, that those gains were offset by wage increases for certain hourly employees.
For its fiscal year 2018, which ended May 31, FedEx reported net income of $4.57 billion, up 52% from $3.0 billion in 2017. The company attributed some of the gain to a $1.6 billion benefit from the federal Tax Cuts and Jobs Act. Diluted earnings per share were $16.79, compared with $11.07 for fiscal 2017.
The company’s full fiscal-year revenue was $65.5 billion, up 8.6% compared with $60.3 billion a year ago.
FedEx reported 4Q gains in all of its divisions. The FedEx Express division reported revenue rose 8.8% to $9.6 billion compared with $8.82 billion a year ago. Operating income rose 11.5% to $960 million from $888 million in 4Q 2017.
FedEx Freight, the company’s less-than-truckload segment, saw its 4Q revenue rise 16% to $1.86 billion from $1.60 billion a year ago.
At FedEx Ground, 4Q revenue rose 12% to $4.8 billion from $4.3 billion, while operating income increased 18% to $832 million from $704 million.
“In all my years at FedEx, I have never been so optimistic and so sure of our strategy and our ability to deliver an exciting future,” Smith said during the call.
However, he did express opposition to ongoing efforts in Washington to increase tariffs between the United States and several major trading partners.
“We do remain concerned, however, about threats that manage the free flow of goods among countries — trade as a two-way street — and FedEx supports lowering trade barriers for our customers, not raising them,” he said.
However, the company believes it is well-positioned if additional tariffs are considered and eventually added.
“We believe global supply chains, especially those of high-value items, are well established and would be very difficult to disrupt. We are hopeful that amenable solutions, of course, to trade policy issues will be found,” FedEx President David Bronczek said on the call. “However, our global assets are of such a large scale now that it’s relatively easy for us to reposition our networks really all around the world should any trade patterns evolve.”
FedEx said it expects 2019 adjusted earnings between $17 and $17.60 per share, and is targeting revenue growth of 9% along with capital spending of $5.6 billion.
FedEx ranks No. 2 on the Transport Topics list of the Top 100 For-Hire Carriers in North America.
