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VOL. 133 | NO. 124 | Thursday, June 21, 2018

FedEx Q4 Profits Beat Wall Street Estimates

By Patrick Lantrip

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Memphis-based FedEx Corp. posted a solid growth during its fiscal fourth quarter and full year, with company executives saying the shipping giant can adjust if looming tariffs disrupt trade patterns with China.

“We believe global supply chain, especially those of high-value items are well-established and will be very difficult to disrupt,” FedEx president and chief operating officer Dave Bronczek said during an earnings call Tuesday, June 19. “We are hopeful that amenable solutions of course to trade policy issues will be found. However, our global assets are at such a large scale now that it’s relatively easy for us to reposition our networks, really all around the world, should any trade patterns evolve.”

Memphis-based FedEx Corp. posted a solid growth during its FY18 fourth quarter and end of the fiscal year earnings call. (Daily News File)


The shipping giant reported earnings of $4.15 per diluted share for the fiscal quarter that ended May 31, and net income of just over $1.13 billion, up from $1.02 billion, or $3.75 a share, from a year ago.

Meanwhile, adjusted earnings of $5.91 per share beat Wall Street expectations. Industry analysts had forecast $5.72 per share, according to a Zacks Investment Research survey. This marks the third consecutive quarter FedEx has outperformed expectations, according to the financial research company.

Revenues for the company rose to $17.3 billion from $15.7 billion a year ago, with an operating margin of 7.4 percent. Analysts’ revenue forecast was $17.19 billion, according to Zacks.

For the full fiscal year, FedEx reported net income of $4.57 billion and diluted earnings per share of $16.79, which are up, respectively, from $3 billion and $11.07 a year ago.

Fiscal 2017 revenues rose to $65.5 billion, up from $60.3 billion a year ago, and boasted a full-year operating margin of 7.4 percent, which is down one full percentage point year-over-year.

Looking forward, FedEx Corp. chairman and CEO Fred Smith offered a mixed bag of optimism while also expressing concern about trade issues.

“In all my years at FedEx, I have never been so optimistic and so sure of our strategy and our ability to deliver an exciting future,” Smith said during the call. “We do remain concerned, however, about threats to diminish the free flow of goods among countries. Trade is a two-way street, and FedEx supports lowering trade barriers for our customers, not raising them.”

Smith’s prepared statements on trade came early in the call as some analysts predicted the possibility of a looming trade war with China would be a major focus of the remarks. However, while the topic was later brought back up during the Q&A portion of the call, it did not dominate the conversation.

According to FedEx, quarterly net results included a $255 million, or $0.94 per diluted share, net tax benefit from corporate structuring transactions stemming from the integration of FedEx Express and TNT Express.

Raj Subramaniam, FedEx executive vice president and chief marketing and communications officer, said the company believes the realignment of its FedEx Trade Networks division is a positive step for FedEx.

The change, which became effective March 1, rolls together FedEx’s Custom Critical, Cross Border and Supply Chain businesses; FedEx Trade Networks Transport & Brokerage; and a new company called FedEx Forward Depots that has responsibility for areas such as 3-D printing and the company’s packaging lab.

“It allows us to leverage the vast array of capabilities including air and ocean forwarding, supply chain and fulfillment services, cross-border capabilities, 3D printing and customized transportation solutions across the full global portfolio of FedEx,” Subramaniam said. “In effect, FTN becomes the forced multiplier for our business as our customers benefit from differentiated solutions for the supply chain needs.”

FedEx also reported a $133 million, or $0.49 per diluted share, tax benefit from foreign tax credits associated with the company’s offshore operations.

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