FedEx Corporation (FDX), a global leader of transportation, e-commerce and supply chain management services, reported strong results in the fourth quarter 2010. However, its first quarter fiscal 2011 financial guidance fell below Zacks Consensus Estimates. This was primarily due to fuel prices and slower-than-expected economic recovery.
Financial Outlook
FedEx projects earnings in the range of 85 cents to $1.05 per share for the first quarter 2011. The mid-point of 95 cents per share is well below the current Zacks Consensus Estimate of $1.03 per share. FedEx estimates EPS between $4.40 and $5.00 for full year 2011. The mid-point of $4.70 is also below the current Zacks Consensus Estimate of $5.09.
Fourth Quarter Fiscal 2010 in Details
FedEx reported adjusted earnings of $1.33 per share, in line with the Zacks Consensus Estimate, which was above the year-ago earnings of 64 cents per share (or loss of $2.82 per share including the impairment charges for goodwill and aircraft).
The year-over-year increase in earnings was driven by strong growth in the International Express shipment as well as the FedEx Ground segment, which was partially offset by the resumption of certain 401(k) employee compensation programs, higher aircraft maintenance expenses and operating losses at FedEx Freight.
Full-year 2010 adjusted earnings were flat year over year at $3.76 per share. Reported earnings increased substantially from 31 cents per share including impairment charges for goodwill and aircraft.
Total revenue inched up 20% year over year to $9.43 billion in the fourth quarter but dropped 2% year over year to $34.7 billion in full year 2010. The demand for transportation services is increasing with the growth in both industrial production and global trade due to the recovery in the economy.
Operating income was $696 million in the fourth quarter compared with an operating loss of $849 million in the year-ago period, resulting in an operating margin of 7.4%. Full-year 2010 operating income increased to $2 billion from the year-ago level of $747 million, resulting in an operating margin of 5.8%. Operating expenses were flat year over year in the fourth quarter and increased 6% in the full year 2010.
Segment Results
FedEx Express reported revenue of $5.9 billion, up 23% year over year, primarily driven by increased business from Asia, which carries a higher margin of profit. Total operating income was $413 million versus a loss of $136 million in the prior-year quarter. FedEx International Priority (IP) average daily package volume expanded 23% year over year while revenue per package increased 6%.
FedEx Ground revenue reported an increase of 15% year over year to $1.96 billion. The increase was due to package volume growth at FedEx Ground as well as FedEx SmartPost volume growth. Operating income increased 57% from the year-ago level to $203 million, while the operating margin increased 4.4 percentage points to 16.3%. FedEx Ground average daily package volume increased 7% while yield grew 5% during the fourth quarter. FedEx SmartPost volume inched up 23%, while yield increased 6%.
FedEx Freight reported revenue of $1.23 billion, jumping 30% year-over-year, reflecting higher average daily LTL (less-than-truckload) shipments, which were partially offset by lower yields. Operating loss narrowed during the fourth quarter from $106 million to $36 million. LTL average daily shipments rose 34% while yields fell 6%.
FedEx Services revenue dipped 6% year over year due to lower copy revenue.
Dividend
FedEx is expected to pay an increased quarterly cash dividend of 12 cents per share (up from 11 cents) on common stock to stockholders of record as on June 17, 2010. The dividend is payable on July 1, 2010.
Read the full analyst report on "FDX"
Zacks Investment Research
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FedEx projects earnings in the range of 85 cents to $1.05 per share for the first quarter 2011. The mid-point of 95 cents per share is well below the current Zacks Consensus Estimate of $1.03 per share. FedEx estimates EPS between $4.40 and $5.00 for full year 2011. The mid-point of $4.70 is also below the current Zacks Consensus Estimate of $5.09.
Fourth Quarter Fiscal 2010 in Details
FedEx reported adjusted earnings of $1.33 per share, in line with the Zacks Consensus Estimate, which was above the year-ago earnings of 64 cents per share (or loss of $2.82 per share including the impairment charges for goodwill and aircraft).
The year-over-year increase in earnings was driven by strong growth in the International Express shipment as well as the FedEx Ground segment, which was partially offset by the resumption of certain 401(k) employee compensation programs, higher aircraft maintenance expenses and operating losses at FedEx Freight.
Full-year 2010 adjusted earnings were flat year over year at $3.76 per share. Reported earnings increased substantially from 31 cents per share including impairment charges for goodwill and aircraft.
Total revenue inched up 20% year over year to $9.43 billion in the fourth quarter but dropped 2% year over year to $34.7 billion in full year 2010. The demand for transportation services is increasing with the growth in both industrial production and global trade due to the recovery in the economy.
Operating income was $696 million in the fourth quarter compared with an operating loss of $849 million in the year-ago period, resulting in an operating margin of 7.4%. Full-year 2010 operating income increased to $2 billion from the year-ago level of $747 million, resulting in an operating margin of 5.8%. Operating expenses were flat year over year in the fourth quarter and increased 6% in the full year 2010.
Segment Results
FedEx Express reported revenue of $5.9 billion, up 23% year over year, primarily driven by increased business from Asia, which carries a higher margin of profit. Total operating income was $413 million versus a loss of $136 million in the prior-year quarter. FedEx International Priority (IP) average daily package volume expanded 23% year over year while revenue per package increased 6%.
FedEx Ground revenue reported an increase of 15% year over year to $1.96 billion. The increase was due to package volume growth at FedEx Ground as well as FedEx SmartPost volume growth. Operating income increased 57% from the year-ago level to $203 million, while the operating margin increased 4.4 percentage points to 16.3%. FedEx Ground average daily package volume increased 7% while yield grew 5% during the fourth quarter. FedEx SmartPost volume inched up 23%, while yield increased 6%.
FedEx Freight reported revenue of $1.23 billion, jumping 30% year-over-year, reflecting higher average daily LTL (less-than-truckload) shipments, which were partially offset by lower yields. Operating loss narrowed during the fourth quarter from $106 million to $36 million. LTL average daily shipments rose 34% while yields fell 6%.
FedEx Services revenue dipped 6% year over year due to lower copy revenue.
Dividend
FedEx is expected to pay an increased quarterly cash dividend of 12 cents per share (up from 11 cents) on common stock to stockholders of record as on June 17, 2010. The dividend is payable on July 1, 2010.
Read the full analyst report on "FDX"
Zacks Investment Research
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