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FedEx Corp. said its net income fell to negative territory in the fiscal fourth quarter, blunted by costs at its divisions as well as reorganization after a buyout.
For the quarter, ended May 31, it recorded a net loss of $1.97 billion, or $7.56 per diluted share. That compared with net income of $1.13 billion, or $4.15 in the same period the year before.
Revenue was ticked up to $17.8 billion compared with $17.3 billion a year ago.
The Memphis, Tenn.-based company provides transportation, e-commerce and business services worldwide.
For the year, the company earned $540 million, or $2.03 cents, compared with $4.57 billion, or $16.79.
Revenue was $69.7 billion compared with $65.5 billion.
Capital spending for the fiscal year was $5.5 billion.
“Fiscal 2019 was a year of both challenge and change for FedEx,” said Chairman and CEO Frederick Smith. “We are proud of our team members, who are responding with positive actions and innovative solutions that will make FedEx even stronger and more successful in the future.”
The company said its quarterly operating income of $1.32 billion (from $1.33 billion the year before) was negatively affected by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs primarily associated with the U.S.-based voluntary employee buyout program.
But partially offsetting these factors, it said, were the benefits from U.S. volume growth, increased revenue per shipment at FedEx Freight and FedEx Ground, lower incentive compensation expenses and a favorable net impact of fuel at all transportation segments.
“The higher FedEx Ground costs were primarily related to increased purchased transportation rates and the January launch of year-round, six-day-per-week operations,” the company said.
A year ago, results for FedEx Express included an $85 million gain on the sale of a non-core business of TNT Express.
Smith was optimistic, saying the company enters fiscal 2020 with a sharp focus on making the necessary investments to capture significant market opportunities.
“These actions include enhancing FedEx Ground capabilities, speed and efficiency,” he said, “improving FedEx Express hub automation, modernizing our FedEx Express air fleet, integrating TNT Express and reducing unit costs and increasing productivity.”
FedEx said U.S. volume growth and higher revenue per shipment at its Ground and Freight units helped offset the disappointing numbers at Express. Compared with a year ago, FedEx Ground average daily volume and revenue per package were up 9% and 2%, respectively.
FedEx forecast for fiscal 2020 that capital spending would be $5.9 billion.
Also, it said, total TNT Express integration program expenses through fiscal 2021 are now estimated to be approximately $1.7 billion, of which $350 million is expected to be incurred in fiscal 2020.
On May 30, FedEx announced its Ground division will deliver seven days per week during the holiday peak season, and that beginning in January 2020 the service will continue year-round for the majority of the country.
FedEx Express said it expects its 2020 earnings to be down due to macroeconomic weakness and trade uncertainty, continued mix shift to lower-yielding services and a strategic decision to not renew its contract with Amazon.com Inc., which FedEx Express announced it would end later this year.
“I just can’t tell you what’s going to happen on the international economic situation,” Smith said. “It’s just not in my control.”