FedEx reports fourth quarter net loss of $1.97bn

posted on 27th June 2019 by Justin Burns
FedEx reports fourth quarter net loss of $1.97bn

FedEx has reported a net loss of US$1.97 billion for the fourth quarter (Q4) ending 31 May as the US-China trade dispute and weak trade demand impacted results.

In the same quarter in 2018, the express freight firm achieved a net profit of $1.13 billion.

Q4 operating income was down to $1.32 billion (2018: $1.33 billion). Quarterly revenue was up three per cent to $17.8 billion (2018: $17.3 billion).

FedEx said figures were negatively affected by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs primarily associated with the US-based voluntary employee buyout program.

The express freight firm said partially offsetting these factors were the benefits from US volume growth, increased revenue per shipment at FedEx Freight and FedEx Ground, lower variable incentive compensation expenses and a favourable net impact of fuel at all transportation segments.

The company announced this month it would not renew an air freight delivery contract with Amazon that expires 30 June but said the e-commerce giant accounted for less than 1.3 per cent of its revenue in 2018.

FedEx chairman and chief executive officer, Frederick W. Smith said 2019 was a year of both “challenge and change”.

He added: “FedEx enters fiscal 2020 with a sharp focus on extending our lead as the premier global transportation and logistics company and on making the necessary investments today to capture the significant market opportunities we see for the future.

“These actions include enhancing FedEx Ground capabilities, speed and efficiency; improving FedEx Express hub automation; modernizing our FedEx Express air fleet; integrating TNT Express; and reducing unit costs and increasing productivity.”

As for the future, FedEx said in its outlook that at FedEx Express, macroeconomic weakness and trade uncertainty, continued mix shift to lower-yielding services and a strategic decision to not renew the Amazon contract will negatively impact operating income.

“Our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express,” said Alan B. Graf, Jr., FedEx executive vice president and chief financial officer.

“While we are adjusting our costs to mitigate revenue weakness and market shifts, we will continue to invest in areas that expand our capabilities, improve our long-term efficiencies and reduce our cost to serve.”

For the full 2019 fiscal year, Memphis headquartered FedEx reported profit of $540 million on revenue of $69.69 billion.