U.S. multinational courier delivery service FedEx Corp. (FDX, Financial) reported fourth quarter financial results this week. Led by robust e-commerce shopping and higher base packing shipping rates, the company’s earnings and revenue rose.
Besides FedEx, other companies who are into the package delivery business have largely benefited from the stupendous growth of online shopping.
Bird’s-eye view
The package delivery company posted revenue growth of 10% from the year-ago quarter to $17.3 billion. This also remained higher from the estimated figure of $17.25 billion. The company’s adjusted earnings per share for the fourth quarter stood at $5.91, up from $4.19 per share from the same period last year. The company’s net income was adjusted for $255 million net tax benefit from commercial structuring deals like the integration of the company’s Express business with TNT Express.
In addition, the company’s ground revenue surged 12% year on year to $4.8 billion. The growth was attributable to a 6% average daily package volume growth as well as higher base rates. Furthermore, the company’s Express business, which offers time-specific delivery assurance to customers, saw revenue growth of 9% during the quarter.
Shifting gears, the company’s full-year capital expenditure was $5.7 billion. In addition, the company repurchased 4.3 million shares for valued at roughly $1 billion in fiscal year 2018. In addition, the company, during the same period, contributed $2.5 billion to its tax qualified U.S. domestic pension plans. CEO Fred Smith commented:
“FY18 was a year of opportunity and quite frankly, challenges anticipated and unexpected, and FedEx merged more competitive than ever. We're committed to increasing our margins, earnings, cash flows and returns while investing for long-term profitable success.” He added: “At all my years at FedEx I've never been so optimistic and so sure of our strategy and our ability to deliver an exciting future.”
Looking ahead
The company projects revenue to grow by approximately 9% in fiscal year 2019. The company estimates its whole year adjusted earnings per share to lie between $17 and $17.60. The company expects its capital expenditure for the whole year to be around $5.6 billion.
The company estimates operating margin of 8.5%, which excludes integration costs for TNT Express, the European package delivery service acquired a couple of years ago. Moreover, the company anticipates an effective tax rate of around 25%. While the company’s depreciation and amortization expenses are expected to amount to $3 billion for fiscal 2019, its TNT integration expense for the same period is expected to reach $450 million.
(Disclosure: I do not hold any position in the stock mentioned in this article.)
