FedEx beats Q4 estimates, profits rise 33% on strong revenue growth
FedEx (NYSE:FDX) announced Wednesday a more than 30% increase in its fourth quarter earnings, despite higher fuel costs, prompting the company to provide an upbeat fiscal 2012 outlook.
For the three months ending May 31, the Memphis, Tennessee-based delivery service provider posted net income of $558 million, or $1.75 per share, a 33% increase compared to $419 million, or $1.33 per share, in the prior year period.
The strong growth, paired with earnings slightly higher than analysts' $1.72 per share estimate, prompted FedEx to post a bullish first quarter and fiscal 2012 outlook.
FedEx forecasts earnings, on a per share basis, to be in the range of $1.40 to $1.60 for the first quarter and between $6.35 and $6.85 for the full year. Analysts are guiding $1.41 and $6.50, respectively.
"During fiscal 2011, an improved economy, strong customer demand and decisive actions to grow our business led to increased volumes and yields across all transportation segments," said president and CEO Frederick W. Smith.
"With this positive momentum, moderate economic growth and subsiding cost headwinds, FedEx is well positioned to deliver strong earnings growth in fiscal 2012."
FedEx's profits rose mainly from the revenue increases across its three major segments, despite a 44% increase in its fuel expenditures, to $1.3 billion in the quarter, the company said.
Overall, the company's fourth quarter revenues jumped 12% to $10.6 billion, again beating estimates of $10.42 billion.
Strong yield improvement, normal growth in its ground and international express shipments and the return to profitability of its freight segment accounted for the hike, FedEx said. Operating margins improved to 8.4% from 7.4% a year earlier.
The company's express unit saw $6.6 billion in revenues, a 13% year-over-year rise, helped by growth in international priority package volumes, mainly due to Asian exports.
Meanwhile, FedEx's ground business posted $2.3 billion in revenues, up 15% from the previous year's $2.0 billion. Increases were attributed to growth in the business-to-business market and in the company's home delivery service. SmartPost package volume increased 24%, thanks to growth in e-commerce and gains in market share.
The company said the freight segment also turned a profit again in the quarter, with $1.3 billion in revenues, 6% growth from a year earlier. Less-than-truckload (LTL) yields increased 13%, with shipments jumping 8%.
FedEx, whose stock on the New York Stock Exchange rose 2.68% to $91.52 in pre-market trading, said it expects the January 2011 merger of its freight and international LTL businesses to drive improved operating results throughout fiscal 2012.
Related news
- London Mining remains on track to hit 2012 production target at Marampa
- Ceres Power Holdings reports significant improvements of its fuel cell products
- Oxford Catalysts Group shares advance as it announces first start-up of FT reactor
- Mariana Resources kicks off drilling programme at Las Calandrias gold-silver project
- Orogen Gold begins Phase 1 drilling programme at Deli Jovan
- Magnolia Petroleum on track to hit 100 wells target by end-2012
- Mwana Africa sells 15pct stake in Freda Rebecca gold mine for $405k - UPDATE
