FedEx Posts Loss in Q4, Shows Improvement From Year Ago
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FedEx Corp. officials said the global impact of the coronavirus pandemic took a toll on fiscal fourth-quarter results.
However, the Memphis, Tenn.-based carrier’s earnings improved year-over-year.
The company announced June 30 that its fourth-quarter net income was a loss of $334 million, or negative $1.28 a share, compared with a loss of $1.97 billion, or negative $7.56 a share, in the 2019 period.
Fourth-quarter revenue declined 2.24%, to $17.4 billion from $17.8 billion a year ago. Still, the quarterly revenue exceeded Wall Street’s consensus estimate of $16.41 billion.
FedEx provides transportation, e-commerce and business services worldwide.
For the fiscal year, the company reported net income of $1.29 billion, or $4.90 a share, compared with $540 million, or $2.03 a share a year ago. Revenue was $69.2 billion compared with $69.7 billion.
“Though our fiscal fourth-quarter performance was severely affected by the COVID-19 pandemic, I am extremely proud of the herculean efforts of our team members,” FedEx CEO Fred Smith said. “With safety as the first priority, these men and women provided essential transportation of critical supplies across the globe and delivered peak-level e-commerce volumes in the United States.
“As a result of the strategic investments we have made to enhance our capabilities and efficiencies, FedEx is well-positioned to support and benefit from the reopening of the global economy.”
Capital spending for the fiscal year was $5.9 billion, which was what the company said last summer that it planned to spend in fiscal 2020. However, fiscal 2021 will see a cut of $1 billion as the company delays spending on replacement vehicles and other facility investments.
“We have reduced our planned capital spending where possible and taken actions to mitigate the impact of the pandemic,” Chief Financial Officer Alan Graf said.
The company said virtually all of its revenue and expense line items were impacted by the pandemic during the fourth quarter, positively and negatively. Because of business closings, commercial package deliveries plunged, but as millions of people sheltered in place and bought items via e-commerce, residential deliveries were up at FedEx Ground, and in transpacific and charter flights with FedEx Express.
On a conference call with business analysts and reporters, company officials pointed to the surge in online shopping as validation of its decision to begin seven-days-a-week residential and business delivery service.
FedEx Ground’s average daily package volume surged 26.1% from 8.8 million to 11.1 million. That volume is similar to what the company experiences during the holiday shopping season from Thanksgiving through early January. FedEx said that 72% of its U.S. shipments in the latest quarter were to residences compared with 56% a year ago.
Officials said the pandemic is accelerating the movement toward e-commerce.
“What we expected to happen over a few years happened in a matter of months,” Chief Operating Officer Raj Subramaniam said on an earnings call with analysts and reporters.
FedEx also said it spent an additional $125 million in operating costs as a result of purchasing personal protective equipment, along with medical and other safety supplies for employees. The company also endured other costs because of additional cleaning services in its buildings, delivery trucks and airplanes.
Company officials said FedEx will not be providing a 2021 earnings forecast due to uncertainty concerning the pandemic.
FedEx Express, which is FedEx’s largest division, made a quarterly profit of $338 million on revenue of $8.6 billion. That compares with a profit of $766 million in 2019 on revenue of $9.5 billion.
FedEx Express in December said it would be reducing flight hours as the express delivery division has struggled with weak global demand because of the pandemic.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 15 on the Transport Topics Top 50 list of the largest logistics companies in North America.
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