The nation’s largest integrator, FedEx Express, reported a fiscal fourth quarter 2015 net loss of US$895 million on June 17, considerably lower than US$780 million net gain in Q4 2014. The company’s Q4 ended May 31, with revenue of $12.1 billion. Pension expenses, a stronger dollar and lower fuel surcharges all weighed in on the results.
The carrier also blamed much of the $1.5 billion swing in year-over-year net income on impairment charges related to its decision earlier this month to retire 15 aircraft and 21 engines, and to accelerate the retirement of another 23 aircraft. Minus the charges, the adjusted net income reported for Q4 2015 was $753 million, or a 3.5 percent decline from the same period a year ago.
Earnings per diluted share for Q4 were $2.66 compared to adjusted earnings of $2.54 per diluted share one year ago. Shares of FedEx dropped more than 3 percent in early trading Wednesday, upon release of the news, closing at $176.73 per share.
“Fiscal 2015 was a transformative year for FedEx with outstanding financial results driving expanded long-term value for shareowners,” said Fred Smith, FedEx CEO. “Significant acquisitions announced in the year promise to strengthen our portfolio of services and change what’s possible for customers.”
One can only assume that Smith is referring to FedEx’s pending acquisition of TNT for $4.8 billion. The deal is waiting for approval from European authorities, but appears to be on track. FedEx did not include any operating results or costs related to TNT in its fiscal 2016 outlook. For 2016, the company is projecting adjusted earnings to be $10.60 to $11.10 per diluted share.
Capital spending for fiscal 2016 will be boosted by 7 percent to $4.6 billion, which includes expansion of the FedEx Ground network and planned aircraft deliveries to modernize the FedEx Express fleet. The need for additional capital for the ground network is needed for FedEx to keep up with the online shopping boom, the company said.
The Wall Street Journal reported that the ground-network expansion is expected to peak at $1.6 billion this year and fall about 30 percent in subsequent years. As volume increased by 5 percent in ground delivery, revenue jumped 19 percent to $3.57 billion.