FedEx chief: “worst of recession is behind us”
Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer, said, 'there are signs that the worst of the recession is behind us and we remain optimistic that we will see quarter-over-quarter economic improvement later this calendar year.'FedEx lost $876 million in its fiscal year ending May 31, compared to $241 million the prior fiscal year. The company said it had revenue of $7.85 billion, down 20 percent from $9.87 billion the previous year.
“FedEx operations performed well even with strong economic headwinds, thanks to decisive management actions to control costs and committed team members who delivered outstanding service to our customers,' Smith said.
The company noted that its results included $1.2 billion in charges, including $1.1 billion in non-cash charges, resulting primarily from the impairment of goodwill related to the acquisitions of Kinko's Inc. (now known as FedEx Office) and Watkins Motor Lines (now known as FedEx National LTL). It said the impairment charges reflect a decline in the current fair value of these companies in light of economic conditions and their recent and forecasted performance.
The quarter also included costs from actions to align the company's networks to better match demand by removing equipment and facilities from service and reducing personnel.
FedEx said it expected it would earn 30 to 45 cents per diluted share in the current quarter compared to $1.23 per diluted share a year ago. This outlook assumes current fuel prices and a stable economic environment.
The company said it expected the operating environment in the first two quarters of its fiscal year would be extremely difficult because manufacturing activity is expected to be substantially negative year over year through the summer, and last year's first quarter results benefited from stronger economic activity, making earnings comparisons difficult. And it said recent run-up in fuel prices would have a significant negative impact on its first quarter results.
“At this time we do not have enough visibility into the economic recovery and jet fuel prices to provide a meaningful annual earnings forecast. However, we believe that FedEx will be poised for growth in our fiscal second half, as our many cost-saving initiatives gain traction and the economy begins to improve,' said Alan B. Graf, Jr., the company’s chief financial officer.
