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FedEx 4Q profit rises on growth in ground shipping

By WTOP Staff

DAVID KOENIG
AP Business Writer

DALLAS (AP) — The boom in online shopping may be hurting some store-based retailers, but it is doing wonders for FedEx Corp.

The package-delivery giant said Wednesday that its fiscal fourth-quarter profit rose sharply thanks to the growth in e-commerce, which is boosting FedEx’s ground-shipping business at a time when its core express-delivery segment is flat.

FedEx’s earnings of $2.46 per share beat Wall Street’s forecast by a dime. Revenue also topped expectations.

The shares jumped $6.54, or 4.7 percent, to $146.85 in midday trading.

CEO Fred Smith said the “outstanding” fourth quarter capped a solid year and put the company in strong position for the new fiscal year, which ends in May 2015. FedEx said that it would earn between $8.50 and $9 per share in the new year. That is in line with analysts’ average expectation of $8.74, according to FactSet.

Cowen and Co. analyst Helane Becker said the company’s forecast was a plus after Wall Street had grown more cautious about management’s outlook in recent weeks.

The Memphis-based company said that it earned $730 million in its fiscal fourth quarter, which ended May 31, compared with $303 million a year ago, when write-downs weighed on the results. Excluding items, FedEx would have earned $2.13 per share in last year’s fourth quarter.

Revenue rose 3.5 percent to $11.84 billion. Analysts surveyed by FactSet expected $11.66 billion.

Revenue in the ground-shipping business grew 8 percent, helped by gains in e-commerce. That helped offset slower growth in FedEx Express, which accounts for more than half the company’s revenue.

FedEx’s revenue per package on ground shipments rose 2 percent because of rate increases and surcharges on residential deliveries. The same statistic was flat for U.S. deliveries in the key express business.

Last month, FedEx announced that it will start charging more for large but light packages that take up space in its delivery trucks and add to costs. That includes bulky products that consumers buy online instead of in stores. Rival United Parcel Service Co. said Tuesday that it would do the same by considering a bulky package’s dimensions and not just its weight in setting prices for ground shipments.

FedEx executives said they couldn’t estimate how much the change might raise with the change in pricing. Although customers will pay more to ship bulky boxes, they could avoid some of the increase by packing items in smaller boxes than they use now.

“If you have received any kind of packages at your home, whether they are cookies from grandma or an e-commerce package, they’re not always packed efficiently,” said Mike Glenn, the company’s executive vice president of market development.

The latest results marked an improvement over FedEx’s third quarter, when the company was slowed by winter storms that raised costs and cut into shipping volumes. They also indicated that that while e-commerce continues to boost the ground-shipping business, international priority delivery remains flat as customers keep shifting to slower, cheaper services.

Separately, FedEx confirmed that it has received allegations about potential violations of U.S. anti-bribery law but hasn’t been able to verify them. The Wall Street Journal reported that FedEx had been told of claims that its Kenya operation paid bribes to government officials.

In a statement to The Associated Press, the company said it received the allegations in December and began investigating immediately with a U.S. law firm and external auditors in East Africa. The company said that it notified the Justice Department and the Securities and Exchange Commission shortly after hearing of the allegations.

“FedEx has not found anything to substantiate the allegations, but the investigation is ongoing,” the company said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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