FedEx stock slips as currency, fuel impact Q4 results

Special charges for new accounting and pension liabilities practices, aircraft retirements and the settlement of independent contractor litigation offset revenue gains and increases in base rates.    FedEx Corp. on Wednesday announced that it improved adjusted fiscal fourth quarter operating income 5 percent to $1.28 billion from the same period a year ago.
   The company attributed the results primarily to yield growth across its transport segments, higher ground and U.S. domestic express volume, and restructuring initiatives. Nonetheless, FedEx’ stock slipped in early trading as results fell short of analysts expectations, with results pressured by the impact of the strong dollar and lower fuel prices.
   Investment advisor Seeking Alpha today said FedEx (FDX) shares were down 1.72 percent premarket to $179.
   Net income for the fiscal fourth quarter, ended May 31, was flat at $753 million, but without adjustments FedEx actually reported a loss of $895 million versus a profit of $780 million during the same period in 2014.
   Those adjustments factored out the negative impact of special charges for new accounting and pension liabilities practices ($2.2 billion), aircraft retirements, and the settlement of litigation surrounding the company’s use of independent contractor drivers ($228 million).
   During the fourth quarter, revenues at the company’s FedEx Express segment decreased 4 percent due to lower fuel surcharges and unfavorable currency exchange rates. FedEx said domestic revenue per package declined 4 percent because lower fuel surcharges offset improved base rates. International export volume was down 1 percent. FedEx said its international economy product grew 3 percent, while international priority declined 2 percent. Revenue per package on international shipments decreased 8 percent.
   FedEx retired 15 aircraft and 21 engines, and adjusted the retirement schedule for an additional 23 aircraft and 57 engines, resulting in a $276 million impairment loss that was excluded from operating income and margins, according to a statement from the company.
   FedEx Ground revenues grew 19 percent to $3.57 billion, primarily due to new contribution from recently-acquired logistics provider GENCO and higher volumes. Ground yield increased 2 percent due to higher dimensional weight charges and increased rates.
   Revenues in the FedEx Freight segment grew 1 percent to $1.57 billion, with operating margin up 0.3 percent. LTL revenue per shipment improved 2 percent, but volumes were flat, said FedEx.
   For the full fiscal year, FedEx operating income grew to $4.26 billion from $3.59 billion the prior year.
   “Fiscal 2015 was a transformative year for FedEx with outstanding financial results driving expanded long-term value for shareowners,” said Frederick W. Smith, FedEx Corp. president and CEO. “Significant acquisitions announced in the year promise to strengthen our portfolio of services and change what’s possible for customers. I am very proud of the FedEx team for its accomplishments and look forward to a successful fiscal 2016.”
   FedEx said capital spending for the current fiscal year is expected to be about $4.6 billion to expand the FedEx Ground network and add newer planes to its Express fleet. Company officials predicted strong earnings growth in the coming year, projecting adjusted earnings to be $10.60 to $11.10 per diluted share before year-end mark-to-market pension accounting adjustments.
   “The outlook assumes continued moderate economic growth and does not include any operating results or costs related to TNT Express,” officials added.
   FedEx announced a tentative agreement to acquire the Netherlands-based global express carrier TNT Express for $4.8 billion.