10-KPeriod: FY2013

FEDEX CORP Annual Report, Year Ended May 31, 2013

Filed July 15, 2013For Securities:FDX

Summary

FedEx Corporation's 2013 10-K filing reveals a challenging year marked by significant business realignment costs and aircraft-related charges, which impacted profitability despite revenue growth. Total revenues increased to $44.3 billion, up 4% from the prior year, primarily driven by international domestic revenue at FedEx Express and volume growth at FedEx Ground. However, operating income saw a notable decline of 20% to $2.6 billion, and net income decreased by 23% to $1.6 billion. The company faced a notable shift in customer demand from higher-margin priority international services to lower-margin economy international services, particularly impacting FedEx Express's profitability. This, combined with $560 million in business realignment costs (largely due to a voluntary buyout program) and a $100 million aircraft impairment charge, led to a decrease in operating margin from 7.5% to 5.8%. FedEx Ground continued to show strength, growing market share and revenue, while FedEx Freight also demonstrated profit improvement. Looking ahead, FedEx anticipated continued revenue and earnings growth, contingent on global economic conditions and the ongoing demand shift. The company outlined significant capital expenditure plans for fleet modernization and network expansion, underscoring its commitment to long-term strategic growth and operational efficiency.

Financial Highlights

46 data points
Beta

Revenue

$44.29B

Net Income

$2.72B

6.1% Net Margin

EPS (Diluted)

$8.55

Total Assets

$33.57B

Cash & Equivalents

$4.92B

Free Cash Flow

$4.69B

Financial Statements
Beta
Revenue$44.29B
Operating Expenses$39.85B
Operating Income$4.43B
Interest Expense$82.00M
Net Income$2.72B
EPS (Basic)$8.61
EPS (Diluted)$8.55
Shares Outstanding (Basic)315.00M
Shares Outstanding (Diluted)317.00M

Key Highlights

  • 1Revenue increased by 4% to $44.3 billion, driven by growth in international domestic services and FedEx Ground volume.
  • 2Operating income decreased by 20% to $2.6 billion, largely due to business realignment costs and aircraft impairment charges.
  • 3Net income fell by 23% to $1.6 billion, with diluted earnings per share dropping from $6.41 to $4.91.
  • 4FedEx Express segment profitability was negatively impacted by a shift in customer demand from priority to economy international services.
  • 5FedEx Ground reported strong performance with increased market share and revenue growth.
  • 6The company incurred $560 million in business realignment costs, primarily related to a voluntary employee buyout program.
  • 7An impairment charge of $100 million was recognized due to the decision to retire 10 aircraft and related engines at FedEx Express.

Frequently Asked Questions

FedEx's revenue grew by 4% to $44.3 billion in fiscal year 2013. Key drivers included increased international domestic revenue at FedEx Express, stemming from recent acquisitions, and robust volume growth at FedEx Ground, which benefited from market share gains.

The decline in operating income and net income was primarily attributed to significant one-time charges and unfavorable business trends. These included $560 million in business realignment costs, largely from a voluntary employee buyout program, and a $100 million impairment charge for retired aircraft. Additionally, FedEx Express experienced reduced profitability due to a shift in customer demand from higher-yielding priority international services to lower-yielding economy international services, which could not be fully offset by cost reductions.

FedEx anticipated revenue and earnings growth in fiscal year 2014, driven by the continued strong performance of its FedEx Ground and FedEx Freight businesses and an expected improvement at FedEx Express. However, the company noted that moderate global economic growth and the ongoing shift in demand towards economy international services would constrain earnings growth. The company also outlined plans for increased capital expenditures focused on fleet modernization and network expansion.

FedEx largely mitigated the impact of fuel price fluctuations through its fuel surcharge mechanisms, which are designed to pass through incremental fuel costs to customers. While fuel expenses decreased in 2013 due to lower prices and usage, the company noted that the timing lag in its fuel surcharges could create short-term impacts on earnings. High fuel surcharges also posed a risk of shifting customer demand to lower-yielding services.