FedEx swings to fourth-quarter loss - Downturn saps demand for package deliveries and freight

FedEx swings to fourth-quarter loss - Downturn saps demand for package deliveries and freight
By Justin Baer in New York
Copyright The Financial Times Limited 2009
Published: June 17 2009 13:46 | Last updated: June 17 2009 15:58
http://www.ft.com/cms/s/0/2f6efea0-5b37-11de-be3f-00144feabdc0.html


FedEx on Wednesday reported a deeper fiscal fourth-quarter net loss after the package delivery company wrote down another $1.2bn in goodwill from its past acquisitions of Kinko’s and Watkins Motor Lines.

Profit, excluding those charges, plunged as the global economic downturn sapped demand for package deliveries and freight. While the company said it remained optimistic that the economic outlook would improve later this year, it refrained from issuing a forecast for fiscal 2010 results.

FedEx’s net loss widened to $876m, or $2.82 a share, from $241m, or 78 cents, a year earlier. Excluding impairment charges, earnings fell to 64 cents a share from $1.45. Revenue slumped 20 per cent to $7.85bn from $9.87bn.

The Memphis-based company predicted first-quarter earnings per share would range from 30-45 cents, compared with $1.23 a year ago.

Shares in FedEx fell $1.37 or 2.7 per cent to $50.05 in early Wall Street trading.

“The operating environment for our first two quarters in fiscal 2010 is expected to be extremely difficult,” Alan Graf, chief financial officer, said in a statement. “Manufacturing activity is expected to be substantially negative year-over-year through the summer and last year’s first quarter results benefited from stronger economic activity, making earnings comparisons difficult.

“Also, the recent run-up in fuel prices will have a significant negative impact on our first quarter’s results.”

FedEx reported net income of $98m, or 31 cents a share, in fiscal 2009. Full-year revenue fell 6 per cent to $35.5bn.