FedEx Corp. said Thursday its fiscal fourth-quarter earnings increased 9 percent from last year, but costs associated with the start-up of a new westbound, around-the-world flight kept the package deliverer’s results below Wall Street expectations.
Net income rose to $448 million, or $1.46 per share, from $412 million, or $1.36 per share, in the same quarter a year ago. Sales climbed 10 percent to $7.72 billion from $7.04 billion last year.
On average, analysts surveyed by Thomson Financial were looking for higher profit of $1.48 per share on sales of $7.82 billion in the latest quarter.
The company said fourth-quarter operating margin was hurt by costs associated with the start-up of a new westbound, around-the-world flight in support of future international growth at FedEx Express.
Total combined average daily package volume at FedEx Express and FedEx Ground grew about 6 percent for the quarter, due to continued growth in international express, ground and U.S. domestic express shipments.
“We see continued steady economic growth, both in the U.S. and in international markets, across many sectors,” said Frederick W. Smith, chairman, president and CEO. “As we enter fiscal 2006, we are highly optimistic about the business and expect to achieve double-digit earnings growth.”
Looking ahead, FedEx said it expects earnings to be $1.10 to $1.25 per share in the first quarter of fiscal 2006. Analysts are currently predicting higher profit of $1.26 per share, on average. FedEx said its earnings guidance reflects the recent escalation in jet fuel prices which are expected to remain elevated during the quarter.
The company said its outlook also takes into account the timing lag associated with the Express fuel surcharge, continued startup expenses related to the around-the-world flight and minimal U.S. domestic growth due to a competitive pricing environment.
Earnings for the year are expected to be $5.20 to $5.45 per share — compared with the average analyst estimate of $5.48 per share.