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FedEx Reports Strong Profit Despite Fuel Prices, Economic Challenges

Fedex Profits

First Posted: 06/22/11 12:10 PM ET Updated: 08/22/11 06:12 AM ET

FedEx Corp reported a strong fourth-quarter profit on Wednesday despite fuel and economic challenges and forecast robust 2012 earnings, sending its shares up 3 percent in premarket trading.

"Our actions to improve yields continue to drive revenue and earnings growth across our transportation segments," said Alan B. Graf, FedEX chief financial officer. "Even with higher planned capital spending in fiscal 2012, margins, cash flows and returns are expected to improve year over year."

The No. 2 package delivery company has been able to pass through higher costs via fuel surcharges and still has room to raise prices without major push-back from consumers, most analysts said.

Net profit rose 33 percent to $558 million, or $1.75 per share in the quarter that ended May 31, from $419 million, or $1.33 per share a year ago.

Analysts, on average, forecast a $1.72 per share profit, according to Thomson Reuters I/B/E/S. It was not immediately clear if the two numbers were directly comparable

FedEx forecasts fiscal 2012 profit rising to $6.35 to $6.85 per share.

That forecast is based on the current market outlook for fuel prices and continued moderate global economic growth.

FedEx said it plans to spend $4.2 billion in fiscal 2012, which includes the delivery of aircraft, payments toward future aircraft deliveries and investments in facilities, vehicles and technology.

Capital spending in fiscal 2011 was $3.4 billion, of which $2 billion was for aircraft and related equipment.

The company has been upgrading its fleet to more fuel efficient aircraft.

Fourth-quarter revenue rose 12 percent to $10.55 billion from $9.43 billion a year ago, Memphis, Tennessee-based FedEx said on Wednesday. Wall Street analysts expected $10.4 billion in revenue, on average, according to Thomson Reuters I/B/E/S.

Adjusted earnings were $4.90 per share in 2011, up from $3.76 a year ago and directly in line with the consensus forecast.

FedEx shares rose 3 percent in premarket trading to $91.88.

(Reporting by Lynn Adler, editing by Maureen Bavdek, Dave Zimmerman)

Copyright 2011 Thomson Reuters. Click for Restrictions.

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