FedEx Net Income Rises 6%, Helped by Express
FedEx Corp. net income rose 6% to $692 million, or $2.42 per share, for the fiscal first quarter ended Aug. 31, helped by stronger results at the Express unit and held back by slow-moving U.S. and world economic trends.
The company’s Express profit before interest and taxes rose 45% to $545 million despite a 4% drop in revenue. The performance at the Ground and Freight units lagged the prior year’s first quarter. Revenue totaled $12.3 billion, up 5%. In last year’s fiscal first quarter, net income was $653 million, or $2.26.
“FedEx Corp. is performing solidly given weaker-than-expected economic conditions, especially in manufacturing and global trade,” Chairman Frederick Smith said.
The Express unit, which has been working through a multiyear cost reduction program with steps such as retiring older aircraft, recorded $6.59 billion in revenue, accounting for about 60% of the total. Package volumes rose 1%, but revenue per package declined 7% to $20.05.
“Our profit-improvement program is on track and delivering impressive results,” Smith said. “I am very confident FedEx is well-positioned to deliver value for shareowners, customers and team members in fiscal 2016 and beyond.”
FedEx also lowered its full-year profit estimate to $10.40 to $10.90 per share, blaming economic weakness that hurt less-than-truckload activity and higher Ground costs.
In the Ground unit, revenue increased 29% to $3.83 billion, but profit before interest and taxes was 1% lower at $537 million.
That unit’s profit was hurt by higher incentive compensation, increased self-insurance reserves and higher operating costs. It also was affected by the acquisition of logistics provider Genco, the FedEx statement said.
The increase in revenue included $370 million from the Genco acquisition and changed methods for recording SmartPost revenue that also contributed to the increase.
At FedEx Freight, profit before interest and taxes fell 21% to $132 million, even though revenue was less than 1% lower to $1.6 billion.
Freight’s less-than-truckload shipments and revenue per shipment both fell 1%. Reduced fuel surcharge collections offset an increase in base rates.
Revenue per 100 pounds of freight for the priority LTL freight was 3% higher at $18.63 but declined 12% for Economy freight to $23.06.
The results didn’t include any activity at TNT Express because European regulators still are considering that acquisition.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
