Financial Analysis for Fedex Corporation

Topics: FedEx, United Parcel Service, Express mail Pages: 7 (2033 words) Published: June 18, 2013
Financial Analysis for FedEx Corporation

EXECUTIVE SUMMARY

The modern air/ground express industry was pioneered with the founding of Federal Express in 1971; the corporation was created in 1998 as FDX Corporation and became FedEx Corporation in January 2000 (FedEx, 2013). FedEx provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services, offering integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. FedEx inspires its more than 290,000 employees to remain absolutely, positively focused on safety, the highest ethical and professional standards and the needs of their customers and communities (FedEx, 2013). FedEx showed real grit in FY12. FedEx’s earnings per share increased 40 percent, and annual revenues exceeded $42 billion, a 9 percent increase, despite political gridlock in the United States, financial turmoil in Europe, a slowing Asian economy and volatile fuel prices. FedEx Ground delivered an 18.4 percent operating margins and accounting for more than half of FedEx operating profit. Online shipments spurred record volumes. More than one quarter of FedEx Ground lanes are now faster in terms of transit times than the competition, boosting service and customer satisfaction to unprecedented levels. As a result, including FedEx SmartPost, FedEx’s overall U.S. ground parcel-market share has increased to nearly 30 percent, doubling over the last decade. The rapid transformation of FedEx Freight paid off with a strong return to profitability. Revenues grew 8 percent year over year. Offering both priority and economy service options and industry-leading transit times have made FedEx Freight a market share leader (FedEx, 2013). This paper addresses current status of FedEx Corporation and how they are performing. The paper addresses FedEx’s SWOT analysis giving their strengths, threats, weaknesses, and opportunities. The paper gives recommendations and then follows with justifications for those recommendations to FedEx’s Corporation management. SWOT ANALYSIS

A SWOT analysis is a look at FedEx’s strengths, weaknesses, opportunities, and threats, and is a way to gain a detailed and thorough perspective on the company and its future. Strength
* Strong brand image
* Unmatched reputation for on-time delivery
* Lots of planes, well-located hubs, great routes/landing rights * Ranked as one of the best companies to work for many years in a row * Great R&D, quite innovative
* Extensive capital expenditures
* Focus on customer satisfaction
* Clear leader in domestic express delivery market
* At present, drivers are independent contractors, unlike at UPS where they are unionized Weakness
* High prices relative to competitors
* Not as strong internationally
* Lag UPS in the ground delivery market
* Not fully differentiable from UPS
* Very exposed to economic conditions and fuel prices
Opportunity
* Economy is beginning to recover, especially in Asia (China specifically) * Currently offer services to 220+ countries and barring government intervention, can expand in them as it sees fit * Continued globalization of the world marketplace means more contracts are available and at higher volumes as well * Expansion of online retailing creates an increased need for on-time, hassle-free shipping * Focus on taking away international market share from DHL and domestic ground delivery from UPS Threats

* High fixed costs
* Drivers and other workers are trying to unionize
* Economic downturn has cut down on volume overall
* Many consumers and businesses are switching to slower delivery options to save money * UPS is attempting to take away market share in the express delivery arena * E-mail may take away from overnight document delivery market FedEx possesses several...

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