FedEx Posts Strong Third Quarter, Yearly Earnings Outlook Adjusted
FedEx Corp., Memphis, reported earnings of $0.76 per diluted share for the third quarter ended February 28, compared to $0.31 per diluted share a year ago.
“Outstanding execution of our business strategy and an improving global economy drove solid financial performance in the third quarter,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer.
Third Quarter Results
FedEx Corp. reported the following consolidated results for the third quarter:
• Revenue of $8.70 billion, up 7 percent from $8.14 billion a year ago
• Operating income of $416 million, up 129 percent from $182 million last year
• Operating margin of 4.8 percent, up from 2.2 percent the previous year
• Net income of $239 million, up 146 percent from last year’s $97 million
Revenue and earnings increased as a result of higher shipment growth, particularly in international express and at FedEx Ground. Strict cost controls also benefited results. Increased net fuel costs, an operating loss at FedEx Freight and the partial reinstatement of certain employee compensation programs impacted the quarter’s results. One fewer operating day year over year at each of the transportation segments also negatively affected results.
FedEx expects earnings per share of $1.17 to $1.37 per diluted share in the fourth quarter, and $3.60 to $3.80 for fiscal 2010, which reflect the current market outlook for fuel prices and a continued modest recovery in the global economy. Previously, the company expected earnings per share of $3.45 to $3.75 for fiscal 2010. The company reported a loss of $2.82 per share in last year’s fourth quarter, which included $3.46 per share of charges primarily related to the impairment of goodwill. The company’s capital spending forecast for fiscal 2010 is now $2.9 billion, up from $2.6 billion, due to additional investments in Boeing 777 aircraft.
“In the fourth quarter, we expect to grow our revenue and earnings through increased demand for our superior services. Yield management will continue to be a top priority across all of our operating companies,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “With our improved performance and outlook, we are reinstating various employee compensation programs, which will dampen earnings growth in the fourth quarter and fiscal year 2011. We are also continuing to invest in long-term projects that improve service and reduce operating costs, such as long-range, fuel-efficient 777 freighters.”