Free Research Paper About FedEx Corporation

Introduction

FedEx Corporation (NYSE: FDX), headquartered in Memphis, Tennessee USA, is a leading courier delivery service company conducting business in over 220 countries worldwide. The company is a constituent of Standard & Poor’s 500 stock market index and Dow Jones Transportation Average (DJTA). Founded in 1971, FedEx operates through four companies or business lines; FedEx Express, FedEx Freight, FedEx Services and FedEx Ground.
Federal Express Corporation (FedEx Express), the largest segment representing 59% of FY2014 revenues, offers air and ocean freight solution through a fleet of 666 aircrafts and 47,500 motorized vehicles. The FedEx Ground Package System, Inc. (FedEx Ground) provides ground package courier services to businesses and households via 40,000 motorized vehicles and this segment produced $11.6 billion or 25% of FY2014 revenues. The third operating company segment, FedEx Freight, Inc. (FedEx Freight), provides less-than-truckload and freight-shipping services on 370 service centers with a vehicle fleet of nearly 20,000. FedEx Corporate Services, Inc. (FedEx Services) segment, on the other hand, delivers support services to clients besides customer relationship& servicing and sales functions.
FedEx consists of operational units, each of which has its own version of the logo, which in 1994 in San Francisco created Lindon Leader (Lindon Leader) of the company Landor Associates. Part abbreviations Fed always purple, and the other part - Ex - has a different color for each division and gray for general corporate use. The original logo FedEx had orange color of the Ex. Now this color is used as the logo FedEx Express. Logo FedEx distinguished by the presence of hidden right arrow in the absence of space between letters E and X.
Since 1990, the company has donated more than 21 million dollars, of which 45% was donated to the Democrats, and 55% in favor of Republicans. Good communication with the White House and members of Congress have provided access to international trade and reduced taxes. In 2001, FedEx has made a deal with the US Postal Service cost 9 billion dollars for the delivery of "next day" urgent and express delivery. In 2005, FedEx was among the 53 companies that have contributed for $ 250,000 in support of the second inauguration of President George W. Bush. During the first 3 months of 2010, FedEx spent nearly 4.9 million. Dollars on lobbying the federal government (the main competitor FedEx - UPS - spent 1.6 million on lobbying in the same period). This figure was 4% higher than similar costs in 2009 (4.7 million. Dollars). The company was named by Fortune magazine as the publication of one of the 100 best companies to work for in 2013.

Financial Performance

The revenues of the company have been expanding as exhibited by revenue growth of nearly 31.4% achieved since 2010. FedEx revenues climbed by 3% year-over-year to $45.6 billion in FY2014, owing to enhanced performance of FedEx Ground and FedEx Freight as well as lowered pension and severance costs, which, to some extent, offset the adverse impact of lowered fuel surcharge and harsh weather. The revenues of FedEx Ground segment grew by 10% year-over-year because of improved pricing and higher volumes. The average revenue per package of FedEx Ground has reached to $9.10 in 2014 compared to $8.17 in 2011. On FedEx Freight end, the revenues rose to 7% because of greater daily LTL shipments and enhanced pricing per LTL shipment, which went up to $234.23 per shipment in 2014 from $208.63 in 2011. The revenues for FedEx Express were relatively flat during FY 2014 due to lesser fuel surcharge and reduced freight revenue. The net income of FedEx Corp. surged to 34% year-over-year to $2.09 billion whereas the diluted EPS increased by 37% year-over-year to $6.75 a share in FY2014. The growth in Diluted earnings per share (DEPS) is ascribed to flat operating expenses like salaries and employee benefits, fuel expenses and expenses incurred on repairs and maintenance. The finance cost increased by $78 million in FY2014 mainly because of an increased finance cost from recent debt facilities and debt issued last year.

Financial Condition

On liquidity end, Fed Ex reported cash and cash equivalents equaled to $2.9 billion on FY 2014 year-end compared to $4.9 billion reported last year. The $2 billion drop is attributed to payments made as a result of Accelerated Share Repurchase (ASR) program, the voluntary buyout program, a 5% rise in CapEx and increased tax payments. Fed Ex Corp. availed $2 billion of unsecured long-term debt to finance ASR. The rate of interest range from 4% - 5.10% and interest is being paid semiannually. The company repaid $250 million senior unsecured notes during FY 2014.
In January 2014, FedEx made an agreement with two banks to buyback FedEx’s common stock under ASR and during the whole year, the company bought back 14.8 million of common stock on average price of $131.83 a share making it $4.9 billion. As of year-end, Fed Ex had 5.3 million shares of common stock under ASR agreements.

Future Outlook

The company believes that its liquidity position is stable and by using the available cushion in financing facilities, it can meet liquidity requirements; like working capital requirement, CapEx, debt repayment. Fig. 1 represents the year wise future payments spreading from 2015 until 2019 and thereafter.
The Capex guidance for FY2015 is $4.2 billion, up by $158 million or 4.7% from FY 2013. The 40% of capital expenditures will be incurred on growth initiatives whereas the remaining 60% will be used to support present operations. The FedEx Ground has seen notable expansion and company aims to expand the network to skim the market.

References

FedEx Corporation. (2015, March). Performance at a glance. Retrieved 2015, from http://investors.fedex.com/financial-information/performance-at-a-glance/default.aspx
FedEx Corporation. (2014). Annual Report FY 2014. Retrieved March 8, 2015, from http://investors.fedex.com/files/doc_financials/annual/FedEx_2014_Annual_Report_v001_a00492.pdf
FedEx Corporation. (2014). Investors: FedEx Corporation. Retrieved March 8, 2015, from FedEx Corporation: http://investors.fedex.com/files/doc_presentations/2015/Roadshow-January-2015.pdf