Fiscal 2016 Earnings: FedEx® Reports Record Revenue in Annual Report
FedEx® recently reported quarterly earnings and revenue surpassing expectations. Revenue exceeded $50 billion for its first time since it was established in 1971, increasing 20 percent year-over-year. This is a good indicator for the well-being of the US economy.
“A recovering economy coupled with the rapid growth of e-commerce should provide a lift to revenues, volumes and operating margins,” Jim Corridore, equity analyst at S&P Global, said in a report.
FedEx stated in the annual report that it is imperative that they continue investing for profitable growth by expanding their network capacity to match the predicted increase in e-commerce shipments. FedEx Ground recently invested $1.6 billion in FY16, including automated hubs in Tracy, California, and Ocala, Florida, and 19 additional automated stations.
FedEx Will Add Surcharges to More Packages Starting June 1In yesterday's conference call to discuss third quarter earnings, FedEx Executive Vice President, Mike Glenn, described upcoming changes to FedEx Ground handling charges.
Our key takeaways from FedEx’s 2016 Annual Report:
- In addition to earning record revenue during the fiscal year, FedEx increased its average daily ground package volume by 9 percent, an achievement driven by growth in e-commerce.
- Earnings climbed to $715 million, or $2.65 a share, from the $692 million, or $2.42 a share, it had reported for the previous year.
- From FY14 through FY16, FedEx returned more than $8.8 billion to shareowners through its repurchase of more than 63 million shares and increased dividends by at least 25 percent annually.
- FedEx expects moderate economic growth, with US gross domestic product up 1.6 percent in 2016 and anticipated rising 2.3 percent in 2017.
- Five years ahead of schedule, FedEx Express surpassed its goal to boost vehicle fuel efficiency 30 percent by 2020 from a 2005 baseline.
- FedEx predicts the value of e-commerce sales worldwide to be $2.4 trillion worldwide by 2018, a 26 percent increase from 2016.
As a result of FedEx’s 2017 rate increase, and anticipated increase in revenue, volume, and operation margins, it is becoming progressively more important for ecommerce and parcel shippers to have a deep understanding of their shipping profile and ensure that their carrier agreement is mutually beneficial, accountable, and fair.