Categories AlphaGraphs, Earnings, Industrials

FedEx slips to a loss in Q4 but beats estimates

FedEx Corporation (NYSE: FDX) slipped to a loss in the fourth quarter of 2019 from a profit last year, due to loss from other retirement plans as well as higher costs and expenses. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates.

Net loss was $1.97 billion or $7.56 per share compared to a profit of $1.13 billion or $4.15 per share in the previous year quarter. Adjusted earnings decreased by 15% to $5.01 per share.

The results were negatively affected by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs primarily associated with the U.S.-based voluntary employee buyout program.

FedEx fourth quarter 2019 results

Revenue rose 3% to $17.8 billion. The company benefited from the US volume growth, increased revenue per shipment at FedEx Freight and FedEx Ground, lower variable incentive compensation expenses and a favorable net impact of fuel at all transportation segments.

During fiscal 2020, operating income at FedEx Ground and FedEx Freight is expected to increase due to higher revenues. At FedEx Express, macroeconomic weakness, and trade uncertainty continued mix shift to lower-yielding services and a strategic decision to not renew a customer contract will negatively impact operating income.

For fiscal 2020, the company expects a low-single-digit percentage point increase in EPS prior to the year-end MTM retirement plan accounting adjustment compared with fiscal 2019 earnings of $13.25 per share. FedEx sees a mid-single-digit percentage point decline in EPS prior to the year-end MTM retirement plan accounting adjustment and excluding estimated TNT Express integration expenses compared with last year’s adjusted EPS of $15.52. Capital spending is expected to be $5.9 billion.

Also read: United Parcel Service Q1 2019 earnings

Total TNT Express integration program expenses through fiscal 2021 are now estimated to be approximately $1.7 billion, of which $350 million is expected to be incurred in fiscal 2020. The company said its fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express.

For the fourth quarter, revenue from FedEx Express declined by 1% year-over-year while that from FedEx Ground grew by 11%. Revenue from the Freight segment increased by 5% and that from FedEx Services segment rose by 1%.

In FedEx Express segment, total package revenue rose by 1% as increases in the US package revenue offset declines in the international export package and international domestic revenues. Freight revenue declined by 7% due to decreases in the US, international priority, economy, and airfreight.

In FedEx Ground segment, average daily package volume increased by 9% and revenue per package or yield rose by 2%. In the FedEx Freight segment, average daily shipment rose by 1%, revenue per shipment increased by 4%, and composite weight per shipment increased by 4%.

Shares of FedEx ended Tuesday’s regular session down 3.03% at $155.98 on the NYSE. Following the earnings release, the stock declined over 1% in the after-market session.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

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