FedEx reports Q4 results and warns of a tough year ahead
26 / 06 / 2019
FedEx reported a fourth quarter fiscal year loss and has warned that earnings for 2020 will be affected by weakness in global trade.
The company reported a fourth-quarter revenue increase of 2.9% to $17.8bn, but a net loss of $1.97bn compared with a profit of $1.13bn for the prior year.
The company was hit by a series of one-off expenses during the quarter, such as retirement plan accounting adjustments and TNT integration costs, which are now expected to total $1.7bn.
With these costs stripped out of the results, the company would have reported a profit of $1.32bn.
Fourth quarter operating income 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 US-based voluntary employee buyout programme, it said.
Partially offsetting these factors were the benefits from US volume growth, increased revenue per shipment at FedEx Freight and FedEx Ground, lower variable incentive compensation expenses and a favourable net impact of fuel at all transportation segments.
Looking ahead, during fiscal 2020, operating income at FedEx Ground and FedEx Freight is expected to increase due to higher revenues.
At FedEx Express, macroeconomic weakness and trade uncertainty, continued mix shift to lower-yielding services and a strategic decision to not renew its Amazon domestic US contract will negatively impact operating income.
For these reasons the company is predicting mid-single digit percentage point decline in diluted earnings per share for fiscal 2020.
“Our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express,” said Alan B. Graf FedEx Corp executive vice president and chief financial officer.
“While we are adjusting our costs to mitigate revenue weakness and market shifts, we will continue to invest in areas that expand our capabilities, improve our long-term efficiencies and reduce our cost to serve.”
In a wide-ranging business review following publication of the results, chairman Fred Smith slammed US protectionist trade policy.