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VOL. 129 | NO. 118 | Wednesday, June 18, 2014

FedEx Earnings Beat Estimates

By Amos Maki

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Fueled by a surge in e-commerce leading to increased gains in its Ground division, FedEx on Wednesday reported higher than expected earnings for the quarter that ended May 31.

Thanks to a surge in e-commerce, gains at FedEx Ground led to higher-than-expected earnings, offsetting slower growth at FedEx Express.

(Daily News File/Kyle Kurlick)

Memphis-based FedEx reported it earned $2.46 a share in the fourth quarter and $6.75 a share for the full fiscal year, above analyst estimates of $2.36 for the quarter and $6.68 for the year.

“An outstanding fourth quarter helped FedEx post solid results for fiscal 2014, and we believe we are well positioned for a strong fiscal 2015,” said Frederick W. Smith, chairman, president and CEO.

“I would like to extend my sincere appreciation to the entire FedEx team for their contribution to our results and their continued commitment to providing outstanding service to our customers and connecting people and possibilities around the world.”

Last year, FedEx, the Memphis area’s largest private employer, reported fourth quarter earnings of $2.13 a share, excluding one-time charges of $1.18 a share related to a business restructuring plan and aircraft retirements, and full-year earnings of $4.91 a share.

Revenue in the quarter rose 3.5 percent to $11.84 billion. Revenue in the ground-shipping business grew 8 percent, propelled by gains in e-commerce. The average daily volume in ground shipments grew 8 percent in the quarter. The gains in the ground-shipping business helped offset slower growth at FedEx Express, which accounts for more than half the company's revenue.

The rebound comes after FedEx recovered from unusually harsh winter weather that caused the company in March to cut its forecast for the 2014 fiscal year.

FedEx also reported it acquired 9.9 million shares of FedEx common stock in the fourth quarter, increasing the fiscal 2014 total to 36.8 million.

FedEx shares jumped $6.54, or 4.7 percent, to $146.85 in midday trading.

FedEx announced in May that it would start charging more for large but light packages, such as bulky products consumers buy online instead of stores, that take up space in its delivery trucks and lead to increased costs. United Parcel Service recently followed suit.

Citing continued strong results from FedEx Ground, modest improvements in the economy and a $1.7 billion cost reduction program, FedEx officials heightened expectations for the fiscal year underway now. The company said it expects to earn $8.50 to $9 a share in the just-begun fiscal year.

“Fiscal 2014 was a good year for FedEx and we expect fiscal 2015 to be even better,” said Chief Financial Officer Alan Graf.

FedEx’s upbeat forecast offers a glimpse into how it views the global shipping environment in the new fiscal year. The company said it expects U.S. economic growth of 3.1 percent in 2015, up from 2.2 percent this year, and global expansion of 3.1 percent next year, up from 2.7 percent in 2014.

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