Memphis-based FedEx Corp. reported a net income of US$303 million for the fourth quarter ended May 31, 2013, down from the $550 million earned for the same quarter of the previous year, as the company incurred a noncash impairment charge of $100 million and $496 million in employee separation costs.
“FedEx Ground posted another strong year and FedEx Freight margins continued to improve,” said Frederick W. Smith, chairman, president, and chief executive officer. “These positive developments did not fully offset tepid economic growth and customer preference for less costly international shipping services.”
The U.S. company said on June 3 it had retired 10 aircraft and related engines to incur a noncash impairment charge of $100 million that it recorded in the fourth quarter. In October, the company announced profit improvement programs that included a voluntary employee separation program that was completed during the fourth quarter of this year.
The company incurred costs of $496 million during the fourth quarter associated with the program. The costs rose to $560 million for the whole fiscal 2013.
FedEx, the world’s biggest airfreight company, said that under the retirement plan, some 3,600 employees will be voluntarily leaving the company in phases for a smooth transition. About 40 percent of the employees left on May 31, 2013 in the first phase. About 25 percent of the employees will leave in the final phase at the end of fiscal 2014.
For the full fiscal year 2013, FedEx reported a consolidated net income of $1.56 billion, down from $2.03 billion in fiscal year 2012. Revenue for the period was $44.3 billion from $42.7 billion in fiscal 2012.
“We remain focused on improving margins and returns in all of our businesses. The pace of that improvement is expected to be moderate in fiscal 2014 and then accelerate in fiscal 2015,” said Alan B. Graf, Jr., executive vice president and chief financial officer. “Our profit improvement program is progressing, but we continue to see the effects of customers selecting lower-rate international services. FedEx Express will further decrease capacity between Asia and the United States in July.”