FedEx Corp. Reports First Quarter Earnings [Integrator]
FedEx Corp. reported earnings of $2.19 per diluted share ($2.51 per diluted share on an adjusted basis) for the first quarter ended August 31, compared to earnings of $2.65 per diluted share ($2.82 per diluted share on an adjusted basis) a year ago. Both as-reported and adjusted earnings reflect the estimated negative impact of the June 27 cyberattack affecting TNT Express ($0.79 per diluted share) and Hurricane Harvey ($0.02 per diluted share).
This year’s and last year’s quarterly consolidated earnings have been adjusted for:
Impact per diluted share First Quarter
Fiscal 2018 Fiscal 2017
TNT Express integration expenses $0.30 $0.17
FedEx Trade Networks legal matters 0.02 —
“The first quarter posed significant operational challenges due to the TNT Express cyberattack and Hurricane Harvey, and I want to thank our team members for their extraordinary dedication and performance,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “We are confident of our prospects for long-term profitable growth, and we reaffirm our commitment to improve operating income at the FedEx Express segment by $1.2 billion to $1.5 billion in fiscal 2020 versus fiscal 2017.”
First Quarter Results
FedEx Corp. reported the following consolidated results for the first quarter (adjusted measures exclude the items listed above for the applicable fiscal year):
Fiscal 2018 Fiscal 2017
(non-GAAP) As Reported
Revenue $15.3 billion $15.3 billion $14.7 billion $14.7 billion
Operating income $1.12 billion $1.24 billion $1.26 billion $1.33 billion
Operating margin 7.3% 8.1% 8.6% 9.1%
Net income $596 million $683 million $715 million $760 million
Diluted EPS $2.19 $2.51 $2.65 $2.82
Financial results during the quarter benefited from higher base rates at each of our transportation segments, which was more than offset by reduced revenue and increased expenses resulting from the TNT Express cyberattack, TNT Express integration expenses, higher costs at FedEx Ground, a higher tax rate, and the impact from Hurricane Harvey. Results also benefited from lower incentive compensation accruals.
The worldwide operations of TNT Express were significantly affected during the first quarter by the June 27 NotPetya cyberattack. Most TNT Express services resumed during the quarter and substantially all TNT Express critical operational systems have been restored. However, TNT Express volume, revenue and profit still remain below previous levels.
FedEx is unable to forecast the fiscal 2018 year-end mark-to-market (MTM) pension accounting adjustments. As a result, the company is unable to provide fiscal 2018 earnings guidance on a GAAP basis.
The company is lowering its fiscal 2018 forecast due to the estimated full-year impacts of the TNT Express cyberattack. Before year-end MTM pension accounting adjustments, earnings are now projected to be $11.05 to $11.85 per diluted share for fiscal 2018. The earnings forecast before year-end MTM pension accounting adjustments and excluding expenses related to TNT Express integration and certain first quarter FedEx Trade Networks legal matters is now $12.00 to $12.80 per diluted share for fiscal 2018. These forecasts assume moderate economic growth and continued recovery from the cyberattack.
The capital spending forecast for fiscal 2018 remains $5.9 billion.
“The impact of the cyberattack on TNT Express and lower-than-expected results at FedEx Ground reduced our first quarter earnings,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer.
“We are currently executing plans to mitigate the full-year impact of these issues.”
2018 Rate Increases
As previously announced, effective January 1, 2018, FedEx Express, FedEx Ground and FedEx Freight will increase shipping rates by an average of 4.9%. Effective January 22, 2018, dimensional weight pricing will apply to FedEx SmartPost shipments. Details related to these and additional changes to rates and surcharges are available at fedex.com/rates2018.
FedEx Express Segment
For the first quarter, the FedEx Express segment (which includes TNT Express) reported (adjusted measures exclude TNT Express integration expenses):
Fiscal 2018 Fiscal 2017
(non-GAAP) As Reported
Revenue $8.65 billion $8.65 billion $8.46 billion $8.46 billion
Operating income $433 million $521 million $610 million $652 million
Operating margin 5.0% 6.0% 7.2% 7.7%
Revenue grew primarily due to higher U.S. domestic package base rates and strong international package growth, partially offset by the impact from the TNT Express cyberattack.
Operating results declined due to an estimated $300 million impact from the cyberattack, which was partially offset by the benefits from revenue growth, lower incentive compensation accruals and ongoing cost management initiatives. As-reported results include $88 million of TNT Express integration expenses.
FedEx Ground Segment
For the first quarter, the FedEx Ground segment reported:
Fiscal 2018 Fiscal 2017 Change
Revenue $4.64 billion $4.29 billion 8%
Operating income $626 million $610 million 3%
Operating margin 13.5% 14.2% (0.7 pts)
Revenue increased primarily due to average daily package volume growth of 4% and higher commercial service base rates.
Operating income grew 3% due to revenue growth and lower incentive compensation accruals, which offset continued network expansion and staffing costs, higher purchased transportation expenses and increased self-insurance reserves.
FedEx Freight Segment
For the first quarter, the FedEx Freight segment reported:
Fiscal 2018 Fiscal 2017 Change
Revenue $1.75 billion $1.66 billion 6%
Operating income $176 million $135 million 30%
Operating margin 10.0% 8.1% 1.9 pts
Revenue increased primarily due to higher base rates, increased weight per shipment and higher fuel surcharges. Average daily less-than-truckload (LTL) shipments grew 1% as the company continues its focus on revenue quality.
Operating results improved primarily due to the benefit from higher LTL revenue per shipment.
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $61 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 400,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. To learn more about how FedEx connects people and possibilities around the world, please visit about.fedex.com.
Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks, Statistical Books and first quarter fiscal 2018 Earnings Presentation. These materials, as well as a webcast of the earnings release conference call to be held at 5:00 p.m. EDT on September 19, are available on the company’s website at investors.fedex.com. A replay of the conference call webcast will be posted on our website following the call.
The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our Securities and Exchange Commission (“SEC”) filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media and others interested in the company to visit this website from time to time, as information is updated and new information is posted.
Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, a significant data breach or other disruption to our technology infrastructure, the ongoing impact of the June 27 cyberattack affecting TNT Express, our ability to successfully integrate the businesses and operations of FedEx Express and TNT Express in the expected time frame, changes in fuel prices or currency exchange rates, our ability to match capacity to shifting volume levels, new U.S. domestic or international government regulation, our ability to effectively operate, integrate and leverage acquired businesses, our ability to achieve our FedEx Express segment profit improvement goal, legal challenges or changes related to owner-operators engaged by FedEx Ground and the drivers providing services on their behalf, disruptions or modifications in service by, or changes in the business or financial soundness of, the U.S. Postal Service, the impact from any terrorist activities or international conflicts and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Posted at 22:07 パーマリンク
New DHL Resilience360 Analytics module to provide businesses with foresight on supply chains risks [Integrator]
New module offers deep analytical capabilities integrating comprehensive risk data with customer supply chain data
The new tool combines insights across all existing Resilience360 modules
Customizable and exportable dashboards provide deep analytical view
At its third annual Risk & Resilience Conference today, DHL launched a tool that streamlines and consolidates data from existing modules to provide further insights through DHL Resilience360, the Group's innovative, cloud-based risk management platform and early warning system. Resilience360 Analytics is unique in combining years of systemically collected supply chain data with some of the most comprehensive risk databases available on the market. It combines DHL's Risk Exposure Index, a weighted index across more than 30 risk categories, with customer supply chain and business impact data to provide predictions of potential future obstacles. The analyzed and consolidated data is visualized in a succinct manner and helps businesses have an increasingly clear view into their supply chains.
"As global businesses are growing rapidly while supply chains are becoming more complex, it is crucial for our customers to detect future obstacles along the supply chain and take early actions to mitigate business risks," says Tobias Larsson, Head of Resilience360, DHL Customer Solutions & Innovation.
During Hurricane Harvey, about 33 percent of US chemical production was disrupted and many chemical suppliers had to give force majeure notices. Resilience360 Analytics showed that the expected shortages of basic industrial building blocks such as ethylene, chlorine or butadiene are likely to have an impact on the Automotive, Life Science & Healthcare and Electronics industries. A manufacturing company in one of these sectors, for example, might have a supplier of chemicals that ships items by rail from the Port of Houston. Armed with the knowledge that the port and the railway were likely to be closed for a certain period of time, the customer could be the first to pre-order additional supplies to cover that period. With the information from Resilience360, DHL is able to visualize their customer's end-to-end supply chain, making it possible to specifically say whether production lines may be impacted and revert to contingency plans, if needed.
The new module immediately provides insights to companies, helping them to gain profound understanding of risks affecting their supply chain. These insights include:
Benchmarking dashboards to compare own risk profiles with those of industry peers and to receive early-warnings on incidents.
Sector-specific analysis based on unique risk profiles of various geographically mapped supplier production locations.
Risk bottlenecks in supply chains by analyzing registered incidents that have had impact on nodes and receiving user feedback on relevant events.
Supply chain pain points by combining historic as well as forward-looking risk information with supplier data (trade volumes, business impact scores, value at risk, single sourcing etc.).
The new module for instance shows that automotive and aerospace industries are 16.6 percent and 4 percent below the average risk profile, meaning that these industries are the most risk averse, while chemicals and technology have a substantially higher risk profile with figures at 8 percent and 10 percent above the average respectively.
"Utilizing the new analytical tool and methods now gives us the basis to develop regression and predictive models, further enhancing our solutions in the area of risk mitigation. Together with the Deutsche Post DHL Data Science teams, we are currently looking into alternative re-routing suggestions as well as shipment delay predictions, to forecast the likelihood and the potential duration of shipment disruptions for risk events along transportation hubs using millions of historic DHL shipment data sets," says Rick Tillenburg, Senior Customer Operations Analyst at Resilience360.
From natural disasters to cyber-attacks and a quickly changing regulatory environment, organizations need to be prepared in order to take quick action when the inevitable occurs. The new R360 Analytics application complements DHL's Resilience360 platform in order to map out specific industries and the subsequent impacts to other industries likely to run short of supply in the event of a disruption.
Posted at 22:58 パーマリンク
Deutsche Post DHL Group sells Williams Lea Tag to Advent International [Integrator]
Deutsche Post DHL Group further streamlines business portfolio, strengthens its focus on logistics
Advent to acquire leading global provider of marketing and communications supply chain services
Advent International: "We see great future growth potential in Williams Lea Tag on a global scale. Advent will support the company through targeted investment in people, technology and systems and strengthen its customer proposition and help its clients to realise the true potential of their brands."
Deutsche Post DHL Group has agreed to sell its UK-headquartered provider of marketing and communications supply chain services, Williams Lea Tag to Advent International ("Advent"). Advent will assume all assets of the Williams Lea Tag business. The agreement will enable Deutsche Post DHL Group to strengthen its focus on its core logistics service offering. Williams Lea Tag will benefit from Advent's expertise in building outstanding global businesses, enabling it to explore further development opportunities. The two companies will retain a close business relationship globally.
Andy Dawson, Managing Director at Advent International, said, "We see great future growth potential in Williams Lea Tag on a global scale. Advent will support the company through targeted investment in people, technology and systems and strengthen its customer proposition and help its clients to realise the true potential of their brands. Advent's expertise in executing complex carve-outs combined with our deep sector experience will ensure William Lea Tag's transition to an independent company is smooth and will put it on a solid foundation from which it can grow and prosper."
The operations and assets of Williams Lea Tag are expected to transfer to Advent by the fourth quarter of 2017. The business currently employs over 10,000 people and operates in more than 40 countries globally.
Posted at 09:40 パーマリンク
DHL will invest more than EUR 70 million in growing regional Asian footprint [Integrator]
DHL Supply Chain plans to build new facilities, expand truck fleet and invest in new technology, creating an additional 5,000 jobs over the next three years
End-to-end supply chain solutions and service innovation will support cross-sector growth and better serve customers in Vietnam, Cambodia and Myanmar
DHL Supply Chain has announced it will invest more than EUR 70 million in growing its regional footprint in Thailand, Vietnam, Cambodia and Myanmar by 2020. The first and only logistics company to acquire an operational business license in Myanmar since last month, DHL Supply Chain already benefits from a position of market leadership in Thailand and Vietnam, and will concentrate on Cambodia next for further growth opportunities. Over the next three years, the company plans to build new facilities, expand its fleet of trucks, and invest in new technology, creating an additional 5,000 jobs in the four countries.
"Asia-Pacific is one the most important regions for DHL Supply Chain being accountable for a significant share of our revenues in 2016. Consumer, retail and tech industries drive these developments becoming evident in increased amounts of new and extended contracts. Being already the market leader for the region it is fully natural for us to foster our commitment in the region and remaining a reliable partner," comments John Gilbert, CEO DHL Supply Chain.
Regional footprint in Thailand, Vietnam, Cambodia and Myanmar
DHL's investment will also serve the wider needs of a growing Thailand, and an economy which is expected to return to accelerated growth. Government investment in mega projects i.e. infrastructure, EEC, airport expansion plans and so forth are attractive elements for foreign investors in Thailand. According to Kasikorn Bank research1, Thai Land Transport and warehouse market value in 2017 growth is expected to be around five to seven percent. Kevin Burrell, CEO, Thailand Cluster, DHL Supply Chain Thailand explains, "With the technology and innovation that we invest in warehouse and transport operations in Thailand, coupled with our ability to deliver integrated solutions for customers, we are striving to drive enhanced value, which in turn acts as a strong differentiator for us in the market."
DHL Supply Chain Thailand also recently completed a move to new premises located in Bangkok's business area. The company already benefits from a reputation of being the Number 1 in contract logistics in Thailand and DHL's nationwide network comprises of a combined warehouse space of approximately 650,000 sqm across more than 70 facilities, supported by 10,000 dedicated employees. Working as a beneficial extension to its crucially important human talent, DHL has also employed intelligent systems in both warehouse and transport operations such as in automation and robotics, unmanned vehicles, vision picking, transport control tower and telematics.
Kevin adds, "DHL provides sector-specific services across the entire supply chain, encompassing warehousing management, transportation for various business types, expertise in end-to-end supply chain solutions and full management services. DHL Supply Chain provides globally standardized, cost-efficient, high-quality and innovative solutions. We are committed to supporting customers by delivering exceptional operational services and innovation across Thailand's entire supply chain, helping the country to become the premier logistics center for Southeast Asia. We will continue to consolidate and support markets in which we lead, namely Thailand and Vietnam, and invest in markets where we aim to lead such as Myanmar and Cambodia."
Posted at 09:39 パーマリンク
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