FedEx posts 44 per cent fiscal-year profit drop, loss in fourth quarter

Severely impacted by weakened economic conditions, logistics provider FedEx reported a 44 per cent  drop in its net income for the full fiscal year ended 31 May, to $1.13 billion from the $2.02 billion a year ago.

The financial results include a rare quarterly net loss during the fiscal fourth quarter of $241 million, against a net income of $610 million a year ago. According to chairman, president and CEO Frederick Smith, record-high fuel prices and the weak US economy dampened volume growth and substantially affected the FedEx bottom line.

International package (IP) revenues were up 16 per cent for the quarter, as IP revenue per package soared 11 per cent. FedEx attributed this increase to higher fuel surcharges and favourable exchange rates. "IP average daily package volume grew six per cent on account of increases in volume from Asia, the United States and Europe. US domestic revenue per package increased nine per cent on account of increased fuel surcharges and higher rate per pound, though package volume declined by three per cent.

FedEx's full-year revenue went up by eight per cent to $38 billion,more than matched by corresponding increases in  expenses which went up by 12 per cent to $35 billion, including a 30 per cent jump in fuel costs to $4.6 billion. Operating income of $2.08 billion was down 37 per cent from the last year figure of $3.28 billion.

According to FedEx executive vice president and chief financial officer Alan Graf, the company is bracing for a very difficult operating environment for fiscal 2009 on account of the weak US economy and extremely high fuel prices. The focus for FedEx during that period will be reducing expenses and remaining cash flow positive.

The FedEx Express airline segment's fourth-quarter revenue rose nine per cent to $6.37 billion, though operating income declined 31 per cent to $426 million.