FedEx chief Frederick Smith’s annual letter to shareholders credits three I’s — investments, integration and innovation — for exceptional results in fiscal 2017 and the promise of even better future performance.
“FedEx has never been better positioned for significant long-term growth that delivers increased value to shareowners and a more promising future for our team members,” the chairman and CEO said in a letter accompanying the annual report Aug. 15.
FedEx achieved $60 billion in revenue for the first time, boosted by European acquisition TNT Express, and produced a record $5 billion operating profit, during the fiscal year ending May 31. FedEx employs about 30,000 in the Memphis area.
Investments include $1.8 billion in more efficient aircraft and related equipment and FedEx Ground’s addition of major distribution hubs, fully automated stations and other facilities to handle seasonal fluctuations, particularly in e-commerce.
Integration refers to the assimilation of acquired companies such as TNT Express, a key driver in an announced goal of increasing FedEx Express operating income by $1.5 billion a year within three years.
Innovation includes initiatives such as FedEx OnSite, an expanding network of pickup and dropoff locations, such as 8,000 Walgreens stores, that help control residential delivery costs while making services easier for consumers to access.
“While our residential e-commerce revenues are much smaller than our business-to-business revenues, it’s the fastest-growing market and requires constant innovation to make delivery to consumers more efficient,” Smith wrote.
His letter includes a hat tip to longtime lieutenant Mike Glenn and a nod to Dave Bronczek, who took over from Smith this year as president and chief operating officer.
“No member of the FedEx team did more to make FedEx what we are today than Mike Glenn, who retired during FY17 as Executive Vice President, Market Development and Corporate Communications, after more than 35 years of service,” Smith wrote.
He added, “To manage our growth and ensure a faster and more responsive FedEx, we promoted Dave Bronczek, formerly President and CEO of FedEx Express, to President and Chief Operating Officer…The new organization structure will facilitate future growth for our broad portfolio of customer solutions.”