Today, FedEx Corporation (FDX) reported fiscal fourth quarter (May 31) net earnings before nonoperating items of $200 million, or $0.64 per diluted earnings per share — down 56% year over year from the $455 million, or $1.45 diluted earnings per share, posted in the prior-year quarter. This was above consensus diluted EPS of $0.51 and our estimate of $0.63.

Revenues dropped 20% to $7.9 billion from $9.9 billion a year ago, largely due to very weak performances at FedEx Express, where revenues declined 25% to $4.8 billion from $6.4 billion, and at FedEx Freight, where revenues fell 28% to $948 million from $1.3 billion, reflecting reduced shipment volumes, weak pricing due to increased competition, and lower fuel surcharge revenue from a weak global economy.

FedEx Express experienced a 20% year-over-year decline in average daily freight pounds and a 12% decease in average revenue per freight pound. At FedEx Freight, less-than-truck-load (LTL) shipments per day slumped 17%, while revenue per hundredweight decreased 11%.

FedEx Ground held up surprisingly well, as revenues only declined 1% to $1.7 billion from $1.2 billion. Daily package volume was flat while yield fell only 1% due to lower fuel surcharges.

FedEx Services revenue dropped 13% year over year, largely due to a decline in copying revenues.

The company’s outlook for the first two quarters of its 2010 fiscal year remains grim, with FDX citing the decline in manufacturing activity and the recent rise in fuel costs as significant contributors. Specifically, FDX estimates first quarter earnings of $0.30-0.45 per diluted share, down 76-63% from the $1.23 posted a year ago. This compares to consensus of $0.68 per share.

In morning trading, FDX shares are down over 2% from yesterday’s closing price of $51.42. We have a Hold recommendation on FDX, and note that the current Zacks rank is 4, indicating near-term selling pressure on the stock.

Our FDX estimates are under review.

Read the full analyst report on “FDX”
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