Profits

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FedEx delivers 4Q profit 1 hour, 54 minutes ago

MEMPHIS, Tenn. - FedEx Corp., operator of the world's largest express transportation company, on Wednesday reported a 27 percent jump in fourth-quarter earnings, citing solid economic growth in U.S. and international markets.

Net income rose to $568 million, or $1.82 per share, from $448 million, or $1.46 per share, a year ago. Revenue totaled $8.49 billion, up 10 percent from $7.72 billion the previous year.

The results beat Wall Street expectations by a wide margin. On average, analysts were expecting quarterly profit of $1.77 per share on sales of $8.42 billion, according to a poll by Thomson Financial.

Frederick W. Smith, chairman, president and chief executive officer, said, "We remain optimistic about the global economic environment for fiscal 2007 and our ability to effectively manage our business."

Total combined average daily package volume at FedEx Express and FedEx Ground grew about 4 percent year-over-year for the quarter, led by continued growth in ground and international express shipments.

Looking ahead, FedEx said it expects earnings to range between $1.45 and $1.60 per share in the first quarter of fiscal 2007 and $6.45 to $6.80 per share for the full year. Included in this forecast is the company's adoption of new accounting rules for stock options and other share-based payments, which is expected to reduce earnings by about 15 cents per share for the year.

On average, analysts are currently predicting first-quarter profit of $1.43 per share and earnings of $6.73 per share for fiscal 2007.

The company said it sees continued growth in FedEx International Priority, U.S. domestic overnight express box, FedEx Ground and FedEx Freight shipments and improving operating margins in the transportation segments.

Capital spending for fiscal 2007 is forecast to be about $2.9 billion, of which approximately 75 percent is targeted for growth. Investments in the global network at FedEx Express and the transportation networks at FedEx Ground and FedEx Freight will continue to add capacity and new technologies, and the company said FedEx Kinko's will initiate a multi-year network expansion program to increase retail locations for customer access to FedEx Kinko's business services and the FedEx Express and FedEx Ground shipping networks.

"FedEx will significantly invest in growth opportunities in fiscal 2007," said Alan B. Graf, Jr., executive vice president and chief financial officer, pointing to the acquisition of trucking company Watkins Motor Lines for $780 million, announced in May, and the expansion of operations in China.
Shares of FedEx closed Tuesday at $108.32 on the NYSE.