FedEx ends fiscal year strong, posts $1.18 billion annual profit

FedEx reported net income for its fiscal year ended May 31 of $1.18 billion, significantly improved over a $98 million profit in the prior year, despite a 2% dip in revenue to $34.73 billion.

Total FY2009-10 expenses lowered 6% to $32.74 billion, helped in part by an 18% decrease in fuel costs to $3.1 billion. Operating income was $2 billion, well more than double $747 million in the prior year.

The company noted that the fiscal year, which began in the midst of the global recession, ended on a strong note, with fourth-quarter revenue rising 20% year-over-year to $9.43 billion. Fourth-quarter net income of $419 million was reversed from an $876 million loss in the year-ago period.

The FedEx Express airline segment posted a 23% increase in revenue for the fiscal fourth quarter to $5.88 billion. For full FY2009-10, the Express segment's revenue dropped 4% to $21.56 billion but its operating income jumped 42% to $1.13 billion.

Chairman, President and CEO Frederick Smith said that "sequential growth in package volume and our ability to leverage our unique global networks to take advantage of a recovering economy" boosted results as the year went on. Total daily packages carried by the Express unit rose 3% for the fiscal year.

"We expect continued improvement in both revenue and earnings" in FY2010-11, Executive VP and CFO Alan Graf said. "Resumed growth in industrial production and global trade is increasing demand for our transportation services." But he warned that "growth in earnings [will be] constrained by significant increases in fixed pension and volume-related aircraft maintenance expenses, along with higher anticipated healthcare costs."