FedEx's integration with TNT leaves firm with Q4 loss of US$1.97b
FEDEX reported a fourth quarter fiscal net loss of US$1
FEDEX reported a fourth quarter fiscal net loss of US$1.97 billion against earnings of $1.13 billion in 2018, despite fourth quarter revenue rising 2.9 per cent year on year to $17.8 billion.
The loss was attributed to TNT integration costs, which are now expected to total $1.7 billion, and other one-off expenses during the quarter, such as retirement plan accounting adjustments.
Remove these factors from the equation and the express delivery firm would have reported a profit of $1.32 billion.
Fourth quarter operating income was also negatively affected by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs mainly tied to the US-based voluntary employee buyout programme, reported London's Air Cargo News.
Partially offsetting these factors were the benefits from US volume growth, higher revenue per shipment at FedEx Freight and FedEx Ground, lower variable incentive compensation expenses and a favourable net impact of fuel at all transportation segments.
Looking ahead, operating income at FedEx Ground and FedEx Freight during fiscal 2020 is forecast to rise thanks to higher revenues.
At FedEx Express, macroeconomic weakness and trade uncertainty, continued mix shift to lower-yielding services and its decision not to renew its Amazon domestic US contract will negatively impact operating income.
'Our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express,' said FedEx Corp executive vice president Alan Graf.
'While we are adjusting our costs to mitigate revenue weakness and market shifts, we will continue to invest in areas that expand our capabilities, improve our long-term efficiencies and reduce our cost to serve.'