FedEx Freight back in the black
In its fiscal fourth quarter and year-end earnings report, FedEx Corp. stated that overall profits increased for the company-- but especially for FedEx Freight, its LTL operation, due to better yield management practices and fuel surcharges.
FedEx said net income topped $558 million on revenues of $10.55 billion in its fourth fiscal quarter, up 33% and 12%, respectively, from the same period during fiscal 2010, with margins increasing to 8.4%. For fiscal 2011, FedEx said net income topped $1.45 billion on revenues of $39.3 billion, up 23% and 13%, respectively, compared to all of fiscal 2010.
The company said that FedEx Freight returned to profitability during its fourth fiscal quarter, posting operating income of $42 million, up from a loss of $36 million, and an operating margin of 3.2% compared to a negative 2.9% during the fourth quarter of fiscal 2010. The LTL carrier also saw revenues increase 6% to $1.31 billion in the fourth fiscal quarter this year.
FedEx said that its LTL operations returned to profitability in the fourth fiscal quarter due primarily to higher LTL yields, which increased 13% primarily due to yield management actions and higher LTL fuel surcharges – even though average daily LTL shipments decreased 8%.
Strong yield growth and efficiencies resulting from the combination of the FedEx Freight and FedEx National LTL operations this past Jan. 30 are also expected to drive a substantial improvement in operating results in fiscal 2012, the company added.
“Our actions to improve yields continue to drive revenue and earnings growth across our transportation segments,” said Alan Graf, Jr., FedEx executive vp & CFO. “Even with higher planned capital spending in fiscal 2012, margins, cash flows and returns are expected to improve year over year.”
“During fiscal 2011, an improved economy, strong customer demand and decisive actions to grow our business led to increased volumes and yields across all transportation segments,” added Frederick Smith, FedEx chairman, president & CEO.
“With this positive momentum, moderate economic growth and subsiding cost headwinds, FedEx is well positioned to deliver strong earnings growth in fiscal 2012,” Smith said.