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FedEx Corp. Reports Higher Fourth Quarter Earnings

Dépèche transmise le 22 juin 2011 par Business Wire

FedEx Corp. Reports Higher Fourth Quarter Earnings

FedEx Corp. Reports Higher Fourth Quarter Earnings

MEMPHIS, Tenn.--(BUSINESS WIRE)--FedEx Corp. (NYSE: FDX) today reported earnings of $1.75 per diluted share for the fourth quarter ended May 31, compared to $1.33 per diluted share a year ago, a year-over-year increase of 32%.

“With this positive momentum, moderate economic growth and subsiding cost headwinds, FedEx is well positioned to deliver strong earnings growth in fiscal 2012.”

“During fiscal 2011, an improved economy, strong customer demand and decisive actions to grow our business led to increased volumes and yields across all transportation segments,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “With this positive momentum, moderate economic growth and subsiding cost headwinds, FedEx is well positioned to deliver strong earnings growth in fiscal 2012.”

Fourth Quarter Results

FedEx Corp. reported the following consolidated results for the fourth quarter:

• Revenue of $10.55 billion, up 12% from $9.43 billion the previous year

• Operating income of $888 million, up 28% from $696 million last year

• Operating margin of 8.4%, up from 7.4% the previous year

• Net income of $558 million, up 33% from last year’s $419 million

Revenue and earnings increased due to continued strong yield improvement in all transportation segments and volume growth of ground and international express shipments. FedEx Freight’s return to profitability also improved operating results.

Full Year Results

FedEx Corp. reported the following consolidated results for the full year:

• Revenue of $39.3 billion, up 13% from $34.7 billion the previous year

• Operating income of $2.38 billion, up 19% from $2.00 billion last year

• Net income of $1.45 billion, up 23% from last year’s $1.18 billion

• Adjusted earnings per share of $4.90, up from $3.76 per share a year ago

(Fiscal 2011 earnings per share exclude the impact of certain one-time costs—see table)

Capital spending for fiscal 2011 was $3.4 billion, of which $2.0 billion was for investments in aircraft and related equipment.

Outlook

FedEx projects earnings to be $1.40 to $1.60 per diluted share in the first quarter and $6.35 to $6.85 per diluted share for fiscal 2012. This guidance assumes the current market outlook for fuel prices and continued moderate growth in the global economy. 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 of aircraft as well as progress payments toward future aircraft deliveries, along with investments in facilities, vehicles and information technology in support of the company’s global growth strategy. The company will benefit from the tax expensing/accelerated depreciation provisions included in the Tax Relief Act of 2010 passed last December.

“Our actions to improve yields continue to drive revenue and earnings growth across our transportation segments,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “FedEx Ground maintained its exceptional performance this quarter, increasing volume, yields and margins, while FedEx Freight returned to profitability. Even with higher planned capital spending in fiscal 2012, margins, cash flows and returns are expected to improve year over year.”

FedEx Express Segment

For the fourth quarter, the FedEx Express segment reported:

• Revenue of $6.63 billion, up 13% from last year’s $5.88 billion

• Operating income of $429 million, up 4% from $413 million a year ago

• Operating margin of 6.5%, down from 7.0% the previous year

FedEx International Priority® (IP) average daily package volume increased 6%, led by exports from Asia. IP revenue per package grew 8% due to higher fuel surcharges, the favorable impact of exchange rates, improved weight per package and yield management actions. IP freight pounds increased 13% with revenue per pound up 6% due to higher fuel surcharges and the favorable impact of exchange rates. In total, IP package and freight revenue increased 15% and pounds increased 9% year-over-year. U.S. domestic revenue per package grew 10% due to higher fuel surcharges, yield management actions and increased weight per package, with slightly lower U.S. domestic average daily package volume.

Operating income improvements were driven by strong yield growth, particularly in U.S. domestic package services, and by volume growth in IP package and freight services. Results were negatively impacted by increased retirement plan expenses and the reinstatement of certain compensation programs.

FedEx Ground Segment

For the fourth quarter, the FedEx Ground segment reported:

• Revenue of $2.26 billion, up 15% from last year’s $1.96 billion

• Operating income of $417 million, up 31% from $319 million a year ago

• Operating margin of 18.4%, up from 16.3% the previous year

FedEx Ground average daily package volume grew 6% in the fourth quarter driven by increases in the business-to-business market and the FedEx Home Delivery service. Revenue per package increased 7% primarily due to yield management actions and higher fuel surcharges. FedEx SmartPost average daily volume increased 24% due to growth in e-commerce and gains in market share. FedEx SmartPost revenue per package increased 8% primarily due to growth in higher-yielding services and increased fuel surcharges.

Operating income and margin increased primarily due to higher package yield and volume.

FedEx Freight Segment

For the fourth quarter, the FedEx Freight segment reported:

• Revenue of $1.31 billion, up 6% from last year’s $1.23 billion

• Operating income of $42 million, up from an operating loss of $36 million a year ago

• Operating margin of 3.2%, compared with (2.9%) the previous year

Less-than-truckload (LTL) yield increased 13% primarily due to yield management actions and higher LTL fuel surcharges. LTL average daily shipments decreased 8% as a result of the yield management actions.

The segment returned to profitability in the quarter due primarily to the higher LTL yield. Last year's results included an $18 million impairment charge related to the goodwill associated with the acquisition of Watkins Motor Lines. Strong yield growth and efficiencies resulting from the January 30, 2011 combination of the FedEx Freight and FedEx National LTL operations are expected to drive a substantial improvement in operating results in fiscal 2012. The net cash effect of the combination was immaterial, as cash proceeds of $88 million from asset sales offset severance and other cash outlays.

Corporate Overview

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $39 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 290,000 team members to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and fourth quarter fiscal 2011 Statistical Book. These materials, as well as a Webcast of the earnings release conference call to be held at 8:30 a.m. EDT on June 22 are available on the company’s Web site at www.fedex.com/us/investorrelations. A replay of the conference call Webcast will be posted on our Web site following the call.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management's views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, legal challenges or changes related to FedEx Ground’s owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO GAAP FINANCIAL MEASURES

The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding a reserve associated with a legal matter in the second quarter and the costs of the combination of FedEx Freight and FedEx National LTL operations from our full-year earnings, net of applicable incentive compensation impacts, will allow more accurate comparisons to prior periods of operating performance for fiscal 2011. As required by SEC rules, the table below presents a reconciliation of our presented non-GAAP measure to the most directly comparable GAAP measure.

   
FY 2011 Diluted

Earnings Per Share

Non-GAAP Measure

$4.90

FedEx Freight Combination Costs

(0.26)

ATA Legal Reserve, Net

(0.07)

GAAP Measure

$4.57

 
 
FEDEX CORP. FINANCIAL HIGHLIGHTS
                           
 
Fourth Quarter Fiscal 2011
(In millions, except earnings per share and FTEs)
(Unaudited)
 
Three Months Ended Twelve Months Ended
May 31 May 31

2011

2010

%

2011

2010

%

Revenue:
FedEx Express segment $6,628 $5,877 13 % $24,581 $21,555 14 %
FedEx Ground segment 2,263 1,962 15 % 8,485 7,439 14 %
FedEx Freight segment 1,309 1,231 6 % 4,911 4,321 14 %
FedEx Services segment 438 448 (2 %) 1,684 1,770 (5 %)
Other & eliminations (86 ) (90 ) 4 % (357 ) (351 ) (2 %)
Total Revenue 10,552 9,428 12 % 39,304 34,734 13 %
 
Operating Expenses:
Salaries and employee benefits 3,866 3,677 5 % 15,276 14,027 9 %
Purchased transportation 1,511 1,299 16 % 5,674 4,728 20 %
Rentals and landing fees 612 595 3 % 2,462 2,359 4 %
Depreciation and amortization 499 488 2 % 1,973 1,958 1 %
Fuel 1,277 886 44 % 4,151 3,106 34 %
Maintenance and repairs 509 500 2 % 1,979 1,715 15 %
Impairment and other charges 1 18 NM 89 18 NM
Other 1,389   1,269   9 % 5,322   4,825   10 %
Total Operating Expenses 9,664 8,732 11 % 36,926 32,736 13 %
 
Operating Income (Loss):
FedEx Express segment 429 413 4 % 1,228 1,127 9 %
FedEx Ground segment 417 319 31 % 1,325 1,024 29 %
FedEx Freight segment 42   (36 ) 217 % (175 ) (153 ) (14 %)
Total Operating Income 888 696 28 % 2,378 1,998 19 %
 
Other Income (Expense):
Interest, net (12 ) (19 ) (37 %) (77 ) (71 ) 8 %
Other, net (11 ) (5 ) 120 % (36 ) (33 ) 9 %
Total Other Income (Expense) (23 ) (24 ) (4 %) (113 ) (104 ) 9 %
 
Pretax Income 865 672 29 % 2,265 1,894 20 %
 
Provision for Income Taxes 307   253   21 % 813   710   15 %
 
Net Income $558   $419   33 % $1,452   $1,184   23 %
 
Diluted Earnings Per Share $1.75   $1.33   32 % $4.57   $3.76   22 %
 
Weighted Average Diluted Common and
Common Equivalent Shares 318 316 1 % 317 314 1 %
 
Capital Expenditures $731 $835 (12 %) $3,434 $2,816 22 %
 
Average Full-Time Equivalents (000s) 257 248 4 % 256 245 4 %
 
FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
       
 
Fourth Quarter Fiscal 2011
(In millions)
(Current period is unaudited)
 
 
May 31, 2011 May 31, 2010

ASSETS

 
Current Assets
Cash and cash equivalents $ 2,328 $ 1,952
Receivables, less allowances 4,581 4,163
Spare parts, supplies and fuel, less allowances 437 389
Deferred income taxes 610 529
Prepaid expenses and other   329     251  

Total current assets

8,285 7,284
 
Property and Equipment, at Cost 33,686 31,302
Less accumulated depreciation and amortization   18,143     16,917  
Net property and equipment 15,543 14,385
 
Other Long-Term Assets
Goodwill 2,326 2,200
Other assets   1,231     1,033  
Total other long-term assets   3,557     3,233  
 
$ 27,385   $ 24,902  
 

LIABILITIES AND STOCKHOLDERS' INVESTMENT

 
Current Liabilities
Curr

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