-A Monitor Report
Memphis : Although FedEx's revenue rose 3.8 per cent, year-over-year, in the fourth quarter of fiscal year 2012, which ended May 31, the US-based integrator saw earnings slide 1.4 per cent, year-over-year, to US$550 million. Even so, FedEx Ground and FedEx Freight performed particularly well in the fourth quarter, with revenues in those segments surging 9 per cent and 7 per cent, year-over-year, respectively.
FedEx Corp. President Frederick W. Smith said the improved performances of FedEx Ground and FedEx Freight throughout the entire financial year, as well as better yields across all business segments, led to "strong earning results for fiscal 2012."
The integrator's express segment - its most lucrative sector - saw mixed results in the fourth quarter of fiscal year 2012, however. Revenue increased 2.6 per cent, year-over-year, to US$6.8 billion, although operating profit in the sector fell 34 per cent, year-over-year.
FedEx Express' average daily package volume in the US also dropped in the fourth quarter, declining 5 per cent, year-over-year. To address such declines, the integrator retired 18 Airbus A310-200 and six Boeing MD10-10 aircraft, as well as 43 jet engines, from its US Express fleet during the quarter. The retirements led to a non-cash impairment charge of US$134 million during the fourth quarter of fiscal year 2012, according to the press release.
The integrator also saw declining daily package volumes abroad, with traffic decreasing 3 per cent, year-over-year, in the fourth quarter. Sluggish volumes out of Asia contributed greatly to this decrease, according to a press release.
Despite this drop, FedEx is looking to grow its express business overseas, particularly in Europe. In April, FedEx agreed to purchase Polish courier Opek Sp.z o.o. - a deal that is expected to close this summer - and announced plans to procure French business-to-business express company Tatex one month later. The Tatex acquisition will give FedEx Express access to a domestic ground network that generates approximately ?150 million in annual revenue, according to reports.
FedEx hopes such acquisitions will benefit the company in the upcoming financial year. "We are focused on improving margins in all businesses, although we face certain cost increases in fiscal 2013," Alan B. Graf, Jr., FedEx Corp. Executive Vice President and CFO, said in a statement. "We expect to mitigate [the challenges ahead] by reducing costs and improving efficiencies, and we are continuing to evaluate additional actions to substantially improve FedEx Express margins."