The Canadian Press - ONLINE EDITION

Growth in e-commerce boosts FedEx, as 4Q profit rises at package-delivery giant

  • Print

DALLAS - The boom in online shopping may be hurting some store-based retailers, but it is doing wonders for FedEx Corp.

The package-delivery giant said Wednesday that its fiscal fourth-quarter profit rose sharply thanks to the growth in e-commerce, which is boosting FedEx's ground-shipping business at a time when its core express-delivery segment is flat.

FedEx's earnings of $2.46 per share beat Wall Street's forecast by a dime. Revenue also topped expectations.

The shares jumped $6.54, or 4.7 per cent, to $146.85 in midday trading.

CEO Fred Smith said the "outstanding" fourth quarter capped a solid year and put the company in strong position for the new fiscal year, which ends in May 2015. FedEx said that it would earn between $8.50 and $9 per share in the new year. That is in line with analysts' average expectation of $8.74, according to FactSet.

Cowen and Co. analyst Helane Becker said the company's forecast was a plus after Wall Street had grown more cautious about management's outlook in recent weeks.

The Memphis-based company said that it earned $730 million in its fiscal fourth quarter, which ended May 31, compared with $303 million a year ago, when write-downs weighed on the results. Excluding items, FedEx would have earned $2.13 per share in last year's fourth quarter.

Revenue rose 3.5 per cent to $11.84 billion. Analysts surveyed by FactSet expected $11.66 billion.

Revenue in the ground-shipping business grew 8 per cent, helped by gains in e-commerce. That helped offset slower growth in FedEx Express, which accounts for more than half the company's revenue.

FedEx's revenue per package on ground shipments rose 2 per cent because of rate increases and surcharges on residential deliveries. The same statistic was flat for U.S. deliveries in the key express business.

Last month, FedEx announced that it will start charging more for large but light packages that take up space in its delivery trucks and add to costs. That includes bulky products that consumers buy online instead of in stores. Rival United Parcel Service Co. said Tuesday that it would do the same by considering a bulky package's dimensions and not just its weight in setting prices for ground shipments.

FedEx executives said they couldn't estimate how much the change might raise with the change in pricing. Although customers will pay more to ship bulky boxes, they could avoid some of the increase by packing items in smaller boxes than they use now.

"If you have received any kind of packages at your home, whether they are cookies from grandma or an e-commerce package, they're not always packed efficiently," said Mike Glenn, the company's executive vice-president of market development.

The latest results marked an improvement over FedEx's third quarter, when the company was slowed by winter storms that raised costs and cut into shipping volumes. They also indicated that that while e-commerce continues to boost the ground-shipping business, international priority delivery remains flat as customers keep shifting to slower, cheaper services.

Separately, FedEx confirmed that it has received allegations about potential violations of U.S. anti-bribery law but hasn't been able to verify them. The Wall Street Journal reported that FedEx had been told of claims that its Kenya operation paid bribes to government officials.

In a statement to The Associated Press, the company said it received the allegations in December and began investigating immediately with a U.S. law firm and external auditors in East Africa. The company said that it notified the Justice Department and the Securities and Exchange Commission shortly after hearing of the allegations.

"FedEx has not found anything to substantiate the allegations, but the investigation is ongoing," the company said.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Glenn January won't blame offensive line for first loss

View more like this

Photo Store Gallery

  • A monarch butterfly looks for nectar in Mexican sunflowers at Winnipeg's Assiniboine Park Monday afternoon-Monarch butterflys start their annual migration usually in late August with the first sign of frost- Standup photo– August 22, 2011   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Goose sits in high grass near Marion Friday afternoon for cover -See Bryksa 30 Day goose challenge- Day 18 - May 25, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Which of Manitoba's new landlord-tenant rules are you looking forward to most?

View Results

View Related Story

Ads by Google