FedEx FY 1Q14 Earnings Call notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Increased expectations for growth

“With private sector demand accelerating and fiscal austerity winding down, our expectation for real GDP growth is to average around 3% for the remainder of this year and next. Our US GDP forecast is now 2.1% for calendar 2014 and 3.1% for calendar 2015. We have increased our expectations for industrial production growth to 4.1% this year and 3.8% in calendar 2015.”

The global economy has improved, although it remains a multi-speed world

” The global economy has improved, although it certainly remains a multi-speed world. The US is leading the way and emerging markets are picking up. We expect global growth of 2.6% in calendar 2014 and 3.1% for calendar 2015.”

Raising prices

“As noted in the press Release, FedEx Express, FedEx Ground and FedEx Freight will be increasing shipping rates an average of 4.9% effective January 5 of 2015.”

Expecting a new record peak season

“And finally, just a couple comments on peak season. We’re expecting another record peak season in terms of delivery volume. Peak will once again be compressed this year with Cyber Monday falling on December 1.”

Adding capacity, adding workers

“We expect more than 50,000 seasonal positions to be added for the upcoming peak across the FedEx operating companies. This includes package handler, helpers, drivers and other support positions. Based upon our growth expectations and network expansion, the majority of those seasonal workers will have the opportunity to continue working for us after the holiday season. ”

We recognize teh dividend yield is low but that’s because the stock performance has been amazing

“We understand our dividend yield is sub par. Part of that is because of the outstanding stock performance. But we will continue to increase our dividends at some level as our strategy and objective, and so we’ll see where we get. ”

Clear change in strategy regarding product launches

“Over the last couple of years, there has been a change in the strategy regarding product launches. This is not a FedEx strategy; let me be clear, this is a market strategy.

More of these companies are electing to build time into their product launch planning to allow them to take advantage of more traditional freight networks to forward deploy the product and move the product into the United States or other markets and stage that inventory for the launch itself. That is changing the mix of traffic. And this is not only affecting FedEx, it’s affecting the entire transportation market in terms of how this product is forward deployed. So, I want to make sure I’m clear about that.”