FDX 2009 Q4 Earnings - by BetterTrades

Before the start to the June 17 trading session, package delivery giant FedEx Corp. (FDX) confirmed that the company’s 4Q results showed a deepening loss over last year’s performance during the same quarter. Recent data revealed that the decline was due in large part to impairment charges, lower shipping volume as well as a worsening global recession.

For the most recent period, FedEx posted a loss in earnings of $876M, or $2.82 per share, much larger than the previous year’s loss in the 4Q of $241M, or $0.78 per share, more than three-and-a-half times last year’s loss.

Existing results included impairment charges totaling $1.2B from the acquisition of Kinko’s Inc., now known as FedEx Office. Charges were also related to the purchase of Watkins Motor Lines, now known as FedEx National LTL. These purchases weighed heavily on the company’s overall earnings, reducing them by $2.22 per share.

Excluding these one-time charges, FedEx would have posted quarterly earnings of $0.64 per share, well below the previous year’s earnings of $1.45 per share.

In the meantime, the company’s overall sales totals slipped during the period as consumer spending and volumes weakened. For the 4Q, revenues dropped from $9.87B to $7.85B, a decline in sales of more than 20%.

Analysts within the industry were looking for FedEx to book a 4Q profit of $0.51 per share on overall sales totals of $8.32B. Back in early March, the company had projected 4Q earnings between $0.45 and $0.70 per share, with one-time charges included between $0.25 and $0.50 per share.

Accelerating the company’s decline in earnings, in addition to their impairment charges, was, of course, the global recession. However, on top of that, the company was also greatly affected by a more competitive pricing environment along with higher fuel surcharges and current exchange rates.

Looking back on the company’s fiscal 2009, net income dwindled to a putrid $98M, or $0.31 per share, a dire comparison to annual earnings in 2008 of $1.13B, or $3.60 per share, a decline in net profits of more than 91%.

Excluding one-time charges year-over-year, FedEx recorded net earnings of $3.76 per share, compared to 2008’s totals of $5.83 per share, with analysts looking for yearly results of $3.63 per share.

Overall revenues for the year retreated as well, falling from $38B to $35.5B, a decrease in sales annually of nearly 7%, as analysts were anticipating yearly revenues of $35.94B.

With 2009 results in the books, FedEx expressed their expectations for the upcoming 1Q. Included in their projection was yearly earnings coming in between $0.30 and $0.45 per share, compared to last year’s 1Q results of $1.23 per share. Analysts are currently looking for the company to post 1Q earnings of $0.68 per share.

"The operating environment for our first two quarters in fiscal 2010 is expected to be extremely difficult. Manufacturing activity is expected to be substantially negative year over year through the summer and last year's first quarter results benefited from stronger economic activity, making earnings comparisons difficult," stated Alan Graf, Jr., Executive V.P. and CFO of FedEx.

Graf went on to add, "However, we believe that FedEx will be poised for growth in our fiscal second half, as our many cost-saving initiatives gain traction and the economy begins to improve."

Over the course of a year, shares of FDX have within a wide range. The stock has reached highs of $96.65 per share and lows of $34.02 per share.

With a less-than-stellar earnings release, the company’s stock continues to trade near the lower end of that range. By the conclusion of the June 17 session, shares of FDX were down just over 1%, losing $0.72 to close out the day at $50.70 per share.

By BetterTrades