FedEx stumbles to $241 million 4th quarter loss

FedEx blamed soaring fuel prices and the weak U.S. economy this week for a fourth quarter loss of $241 million compared to net income of $610 million in the year-earlier period.

The results included a previously announced one-time charge of $891 million to switch the use of the FedEx Kinko's brand to FedEx Office and write-off lost value from the Kinko's acquisition. Comparisons to the fourth quarter of 2006 were skewed by a 6 cent per share settlement with Airbus for cancellation of its delayed order for A-380 jumbo freighters.

Earnings of 78 cents per share came in well below the company's May adjusted earnings guidance of $1.45 to $1.50 per diluted share, down from the previous forecast of $1.60 to $1.80. Excluding these items, earnings were $1.45 per diluted share in the fourth quarter compared to $1.90 per diluted share a year ago.

The integrated logistics company had an operating loss of $163 million, down from income of $1 billion. Revenue grew 8 percent to $9.87 billion for the quarter and $38 billion for the year. Full year operating income was down 37 percent to $2.08 billion from $3.28 billion. Net income for 2007 declined 44 percent to $1.13 billion.

Growth in international and ground package deliveries was canceled out by declines in U.S. express domestic business.

FedEx said earnings guidance is difficult to give in such a volatile environment, noting that fuel surcharges are reducing demand for its services impacting yields across all its transportation segments.

FedEx's less-than-truckload business, FedEx Freight, suffered along with the rest of the industry as operating income fell 21 percent to $99 million and margins fell to 7.6 percent from 10 percent due to fuel price increases and fuel surcharges.

FedEx Freight announced that it will close its San Jose, Calif., general office and combine the LTL regional operations in Harrison, Ark., on Jan. 1 to save money. 

Source: American Shipper