FEDEX REPORTS 11% GROWTH IN 4TH-QUARTER PROFIT; SHIPMENTS UP
FedEx Corp., the Memphis-based express transportation and logistics group, said net income in its fiscal quarter ending May 31 rose 11 percent to $245 million, as resurgent shipment growth and a fuel surcharge overcame higher fuel costs.
Revenue in the fourth quarter increased 11 percent to $4.85 billion, led by a 5-percent increase in the total average daily package volume handled by FedEx Express, FedEx Corp.’s flagship overnight air express division.
Domestic shipment growth at FedEx Express rebounded to its highest level in a year. U.S. average daily package volume increased 3.8 percent to about 3 million packages. International Priority package volume grew 14 percent. Total sales at FedEx Express rose 9 percent to $4.0 billion, while operating income improved 10 percent to $336 million.
FedEx Ground, the former RPS subsidiary, reported a 10-percent increase in revenue to $549 million in the fourth quarter on 3-percent growth in average daily package volume. Operating income declined slightly to $70 million, due to the start-up of FedEx’s new Home Delivery unit.
FedEx Home Delivery operations contributed $11 million worth of losses in the fourth quarter. FedEx Ground expects to incur about $50 million in losses related to the expansion of FedEx Home Delivery for all of fiscal year 2001. FedEx Home Delivery plans to expand its network coverage from 50 percent to 80 percent of the U.S. population by September 2001.
High fuel prices resulted in $84 million in additional costs in the last quarter. For the entire fiscal year, additional fuel expenses totaled $273 million. FedEx offset some of that with a fuel surcharge increase in the fourth quarter from 3 percent to 4 percent.
FedEx Corp.’s full-year net income grew 9 percent to $688 million on a 9-percent increase in revenue to $18.3 billion. Operating income grew 5 percent to $1.22 billion.
“In fiscal 2001, we expect to improve growth and profitability largely through new initiatives that are allowing us to offer the entire spectrum of FedEx services through a single point of access,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “We also intend to better serve small and medium-sized businesses by giving them more choices and easy-to-use, information-rich solutions to meet all their shipping needs — from express to more economical ground-based transportation. While there will be increased expenses resulting from the new initiatives, particularly in the first quarter, we anticipate another record year for sales and profit as well as improving returns and cash flow.”