) - the leader in global express delivery services - reported
fourth quarter and fiscal 2013 results.
Quarterly adjusted earnings of $2.13 per share that breezed
passed the Zacks Consensus Estimate of $1.96 and improved from
the year-ago adjusted earnings of $1.99. The strong earnings
performance was backed by revenue growth at FedEx Ground and
impressive margin performance at FedEx Freight.
Total revenue for the fourth quarter was $11.4 billion versus
$11.0 billion in the fourth quarter of fiscal 2012 and in line
with the Zacks Consensus Estimate.
For fiscal 2013, the company delivered adjusted earnings of
$6.23 (down from $6.59 a year ago) upon adjusted revenues of
$44.3 billion (up from $42.7 billion in the prior year).
Quarterly revenues at
were $6.98 billion, up 3% year over year. Growth was driven by
acquisitions and expanded FedEx Trade Networks, offset by lower
Operating income was up 11% year over year at $460.0 million
in the fourth quarter, resulting in an operating margin of 6.6%,
up 50 bps from 6.1% in the year-ago quarter. The improvement was
aided by the favorable impact of capacity reductions, time lags
related to fuel surcharge, and other cost reduction
The FedEx International Priority (IP) average daily package
volume increased 2% for the quarter and revenue per package
(yield) increased 1% due to the unfavorable impact of lower
revenues increased 12% year over year to $2.78 billion in the
fourth quarter attributable to volume growth. Operating income
was up 13% year over year at $557 million and operating margin
increased 10 bps to 20.1%. Higher volumes and revenue per package
was partially negated by intercompany costs related to business
FedEx Ground average daily package volume increased 10% driven
by increased eCommerce activities. Revenue per package grew 2%.
FedEx SmartPost average daily volume expanded 25% and net revenue
per package decreased 7% because of higher postal rates.
revenues were down 1% year over year to $1.39 billion in the
fourth quarter, reflecting a drop of 3% in LTL
(less-than-truckload) shipments. Yield was, however, up by 1% due
to improvement in FedEx Freight cost structures. The segment
recorded operating income of $81 million, flat year over year.
Operating margin was 5.8%, which also remained unchanged on a
revenues fell 6% year over year to $406.0 million in the fourth
FedEx exited the year with cash and cash equivalents of $4.92
billion compared with $2.84 billion at the end of fiscal 2012.
Long-term debt stood at $2.7 billion compared with $1.25 billion
at the end of the prior year. Capital expenditure amounted to
$3.4 billion compared with $4 billion in fiscal 2012.
For fiscal 2014, FedEx projected adjusted earnings per share
growth of 7% to 13%. The company's capital expenditure guidance
is pegged at $4 billion.
Under the voluntary buyout program, the company expects 25% of
its employees to accept voluntary retirement in fiscal 2014.
About 40% of the total employee strength has already left in
Given a downtrend in international services with customers
mainly seeking cost effective international travel, the company
expects to cut down capacity between Asia and U.S. lanes.
We believe that FedEx is poised to benefit from global
expansion and increased e-commerce activity. The opening of more
service centers and network realignment to match the current
demand level are also expected to enhance the overall performance
level of the company.
Further, the new system, fedex.com Integration Manager is
expected to aid e-commerce customers in their shipping process.
The system connects with platforms like
Nevertheless, the effects of the sluggish economic environment
have cast a shadow over the near-term outlook of the company.
Further, competitive threats, legal hassles, unionized workforce
and rising pension headwinds will likely limit the upside
potential of the stock.
Currently, FedEx retains a Zacks Rank #3 (Hold).
AMAZON.COM INC (AMZN): Free Stock Analysis
EBAY INC (EBAY): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
To read this article on Zacks.com click here.