FedEx says global trade recovery is underestimated, offers conservative outlook for the yearBy Samantha Bomkamp, AP
Wednesday, June 16, 2010
FedEx says global trade recovery is underestimated
NEW YORK — FedEx said people are too pessimistic about a recovery in global trade, after it reported Wednesday that strong exports from Asia and other international shipments drove its improved fourth-quarter results.
While concerns about European economies and their looming debt problems remain, FedEx said international shipments overall grew by 23 percent. Countries like India, China and Brazil in particular are driving the increase.
FedEx said the U.S. economy is steadily growing as well. Still, it has a conservative outlook for the next year, expecting rising costs as shipments pick up.
The company’s forecast for earnings of $4.40 to $5 per share for the fiscal year that started June 1 falls short of analysts’ predictions of $5.05 per share. It’s the first time FedEx has issued a full-year forecast since before the recession, indicating the company’s growing confidence in the long-term recovery.
FedEx, based in Memphis, Tenn., expects to earn 85 cents to $1.05 per share for the quarter ending in August. Analysts forecast $1.03 per share.
In the quarter ended in May, FedEx earned $419 million, or $1.33 per share. It lost $876 million, or $2.82 per share a year earlier. Excluding a writedown on the value of assets and aircraft, earnings were 64 cents per share a year ago.
Revenue climbed 20 percent to $9.43 billion. FedEx took delivery of 18 planes in the fourth quarter. Six of those were Boeing 777Fs, which can fly from the company’s hub in Memphis to China without refueling.
FedEx said international priority shipments jumped 24 percent in the period. Most of those shipments are high-tech, high-value goods like electronics and pharmaceuticals, which people want fast. FedEx will ship Apple’s new iPhone 4s when the popular gadget launches next week.
Average daily shipments in the company’s Ground unit rose 7 percent. The Ground segment grew steadily during the recession as people switched to slower shipping methods to save money, and FedEx gained business as DHL retreated from the U.S. market.
The company’s weak point remains its freight segment, which posted back-to-back losses. FedEx said the market still has too many trucks competing for a relatively small amount of freight, which is preventing it from raising prices. FedEx Freight CEO William Logue said the unit is aggressively reviewing the business. He didn’t provide a timeline for when it would become profitable. This segment ships things like refrigerators and other large appliances…
FedEx’s fourth-quarter earnings were also affected by the reinstatement of merit raises and some 401(k) contributions it cut off during the recession.
For the full fiscal year that ended in May, FedEx posted net income of $1.18 billion, or $3.76 per share, compared with $98 million, or 31 cents per share, in the previous fiscal year.
Revenue fell 2 percent to $34.73 billion.
FedEx shares fell $4.94, or 6 percent, to close at $78.07 Wednesday.
Tags: International Trade, Memphis, New York, North America, Recessions And Depressions, Tennessee, United States