FedEx posts $70 million loss, gives cautious outlook

DALLAS – FedEx Corp. lost $70 million in the latest quarter because of large pension and acquisition items, and the delivery giant gave a cautious outlook for the next 12 months.

The company’s fiscal fourth quarter results Tuesday still beat Wall Street expectations, as FedEx and other delivery companies continue to benefit from the growth in online shopping.

At times, however, the boom in e-commerce has strained the networks of FedEx and United Parcel Service Inc. To keep up, FedEx plans capital spending of $5.1 billion in the fiscal year that just started. FedEx will use the money to expand its ground network and buy more aircraft.

FedEx said it expects earnings excluding one-time items in the new fiscal year to be between $11.75 and $12.25 per share. The midpoint of that range is less than the $12.17 per share that analysts were expecting, according to a FactSet survey.

Still, the midpoint of the company’s forecast suggests an 11 per cent increase in full-year adjusted profit. CEO Fred Smith said on a call with investors that FedEx will increase profit margins and earnings per share over the next several years assuming that economic growth is moderate.

FedEx’s fiscal fourth quarter loss amounted to 26 cents per share and compared with a year-earlier loss of $895 million, or $3.16 per share. Results were dragged down by accounting for the changing value of pension assets and liabilities and by costs related to the acquisition of Dutch delivery company TNT Express.

Without those and other charges, FedEx said it would have earned $3.30 per share compared with $2.66 per share a year earlier. Thirteen analysts surveyed by Zacks Investment Research expected $3.26 per share.

The Memphis, Tennessee-based company had revenue of $12.98 billion, beating the Zacks survey forecast of $12.83 billion.

Operating profit rose in both the express and ground-shipping segments, partly due to higher prices.

For the fiscal year, FedEx reported profit of $1.82 billion on revenue of $50.37 billion, compared with $1.05 billion on $47.5 billion in revenue the year before.

FedEx shares were down $1.95, or about 1.2 per cent, at $162 in after-hours trading following the earnings release. Through the end of Tuesday’s regular-session trading, they had risen 10 per cent since the beginning of the year, while the Standard & Poor’s 500 index was up 2 per cent.