FEDEX;KINKO’S RECORD 4TH Q.UP 6%
FEDEX;KINKO’S RECORD 4TH Q.UP 6%
2005-06-25 at 11:13:00 am #11702
Record Q4 Revenue for FedEx; Kinko’s Up 6%
FedEx Corp. Reports Record Fourth Quarter Revenue and Earnings; Double-digit Earnings Growth Expected in Fiscal 2006.
MEMPHIS, TN, June , 2005 – today reported earnings of $1.46 per diluted share for the fourth quarter ended May 31, compared to $1.36 per diluted share a year ago.
Cross-Selling Strategy Working
“Our strong performance is a result of an effective strategy of cross-selling the full portfolio of FedEx services and delivering outstanding customer service,” said Frederick W. Smith, chairman, president and chief executive officer. “Our strategy is working well and we continue to innovate to bring more value to our customers worldwide. We see continued steady economic growth, both in the U.S. and in international markets, across many sectors. As we enter fiscal 2006, we are highly optimistic about the business and expect to achieve double-digit earnings growth.”
FedEx Kinko’s Segment
For the fourth quarter, the FedEx Kinko’s segment reported:
• Revenue of $553 million, up 6% from last year’s $521 million
• Operating income of $41 million, up 5% from $39 million a year ago
• Operating margin of 7.4%, down from 7.5% the previous year
Demand High for Packaging and Shipping
FedEx Kinko’s revenue for the quarter was driven by demand for packaging and shipping services and signs and banners, partially offset by a slight decline in copy product lines.
Operating margin continued to be negatively affected by integration and expansion activities, including costs associated with center rebranding and expansion, the centralization of FedEx Kinko’s corporate office and the launch of packaging and shipping services at its U.S. locations. Costs associated with expansion and integration activities will continue in fiscal 2006.
1440 Locations Worldwide
With the conversion of 176 former FedEx World Service Center locations to FedEx Kinko’s Ship Centers during the quarter, as well as the continued opening of new domestic and international centers, the company now has approximately 1,440 locations worldwide, up from approximately 1,200 locations a year ago.
Full Year for Kinko’s Segment
Fiscal 2005 revenues included $2.07 billion from FedEx Kinko’s compared to $621 million last year. FedEx Kinko’s was acquired in late fiscal 2004.
FedEx Overall Results for Fourth Quarter
FedEx Corp. reported the following consolidated results for the fourth quarter:
• Revenue of $7.72 billion, up 10% from $7.04 billion the previous year
• Operating income of $740 million, up 8% from $685 million a year ago
• Operating margin of 9.6%, down from 9.7% the previous year
• Net income of $448 million, up 9% from last year’s $412 million
Operating margin during the fourth quarter was negatively impacted by costs associated with the start-up of a new westbound around-the-world flight in support of future international growth at FedEx Express.
Total combined average daily package volume at FedEx Express and FedEx Ground grew approximately 6% year over year for the quarter, due to continued growth in international express, ground and U.S. domestic express shipments.
Full Year Results
FedEx Corp. reported the following consolidated results for the full year:
• Revenue of $29.4 billion, up 19% from $24.7 billion the previous year
• Operating income of $2.47 billion, up 72% from $1.44 billion a year ago
• Operating margin of 8.4%, up from 5.8% the previous year
• Net income of $1.45 billion, up 73% from last year’s $838 million
• Earnings per share of $4.72, up 71% from $2.76 per share the previous year
Fiscal 2005 revenues included $2.07 billion from FedEx Kinko’s compared to $621 million last year. FedEx Kinko’s was acquired in late fiscal 2004. Fiscal 2005 includes a $48 million or $0.10 per diluted share one-time charge related to the Air Transportation Safety and System Stabilization Act, partially offset by a $0.04 per diluted share tax benefit resulting from the passage of the American Jobs Creation Act of 2004. Fiscal 2004 included $435 million or $0.89 per diluted share of business realignment expenses associated with voluntary early retirement and severance programs and $0.12 per diluted share from tax benefits.
Cash flow provided by operations improved for 2005 as well. Combined with available cash balances, cash flow from operations was sufficient to fund capital expenditures for business growth and repay approximately $790 million of debt. Capital spending in fiscal 2005 was $2.2 billion. In addition, the quarterly dividend was increased $0.01 to $0.08 per share in the most recent dividend declaration.
“During fiscal 2005, we made significant progress in our financial goals of improving margins, operating cash flows and returns for our shareowners,” said Alan B. Graf, Jr., executive vice president and chief financial officer.
FedEx expects earnings to be $1.10 to $1.25 per diluted share in the first quarter of fiscal 2006. This earnings guidance reflects the recent escalation in jet fuel prices which are expected to remain elevated during the quarter. In addition, the earnings guidance reflects the timing lag associated with the Express fuel surcharge, continued startup expenses related to the westbound around-the-world flight and minimal U.S. domestic base yield growth in the company’s package services due to a competitive pricing environment.
Earnings for the year are expected to be $5.20 to $5.45 per diluted share, with the company benefiting from growth in FedEx International Priority(R), FedEx Ground and FedEx Freight shipments and improving operating margins. Cash flow is expected to improve.
Capital spending for fiscal 2006 is forecast to be approximately $2.5 billion. Investments in the company’s highest margin service lines will continue as the company adds incremental international routes, deploys new productivity enhancing technologies and broadens the size of its aircraft fleet and sortation capacity to meet future growth.