FedEx delivers losses in Q4

Global – FedEx’s fourth-quarter earnings slipped into the red as it struggles with a weak US economy and high fuel costs.

The express and shipping company reported operating losses of US$163 million, down from an income of US$1.01 billion last year. It registered a net loss of US$241 million for the quarter, compared to the US$610 income from the same quarter last year.

"Record high fuel prices and the weak U.S. economy dampened volume growth and substantially affected our bottom line," said Frederick W. Smith, FedEx chairman, president and CEO.

FedEx said total combined average daily package volume in the FedEx Express and FedEx Ground segments grew 1% year over year for the quarter, as the 6% growth registered in the FedEx International Priority and FedEx Ground shipments were offset by continued declines in US domestic express shipments, the company said.

The company also paid a one-time charge of US$891 million associated with the decision to minimise the use of the Kinko's trade name.

Revenue for the full year went up 8% from US$35.2 billion last year to US$38 billion, while operating income dropped 37% from US$3.28 billion in the last financial year to US$2.08 billion.

FedEx's executive vice president and CFO Alan B Graf also gave a gloomy outlook for fiscal year 2009, as the company navigates around high fuel prices and an uncertain economic environment. "Looking ahead to 2009, we do expect conditions to remain extremely challenging and we anticipate in both the first-quarter guidance and the yearly target the current economic weakness will continue and the current level of fuel costs will not mitigate," he said.

"However, we will focus on reducing expenses and remaining cash-flow positive, and will continue to take positive steps to improve the customer experience across our portfolio of services."