FedEx reports higher Q1 earnings
FedEx has reported a net revenue of $12.3bn and net income of $692m for the first quarter (Q1) of fiscal year (FY) 2016 – up from, respectively, $11.7bn and $612m in Q1 2015. Commenting on the results, Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer, said: “FedEx Corp. is performing solidly given weaker-than-expected economic conditions, especially in manufacturing and global trade.
“Our profit improvement program is on track and delivering impressive results, and I am very confident FedEx is well positioned to deliver value for shareowners, customers and team members in fiscal 2016 and beyond.”
FedEx Express reported revenue of $6.59bn, down 4% from last year’s $6.86bn. Operating income, however was up 45% to $545m.
Giving more details on the Express results, FedEx added: “US domestic package volume grew by 1%, driven by growth in deferred box and overnight envelope. US domestic revenue per package decreased 3% due to lower fuel surcharges, partially offset by strong base rates. FedEx International Economy volume grew 4%, while FedEx International Priority volume decreased 5%. International export revenue per package decreased 7%, as lower fuel surcharges and unfavorable currency exchange rates were partially offset by higher rates and improved package weights.”
FedEx Ground reported Q1 2016 revenue of $3.83bn, up 29% from last year’s $2.96bn, and an operating income of $537m, which was down 1%.
“Revenue increased due to the inclusion of GENCO results, the recording of FedEx SmartPost service revenues on a gross basis versus the previous net treatment, and higher ground revenue per package and volume,” according to the company statement.
“FedEx Ground average daily volume, including FedEx SmartPost shipments, grew 4% in the first quarter due primarily to continued growth in FedEx Home Delivery. FedEx Ground yield increased 11% due to the recording of FedEx SmartPost revenues on a gross basis, higher dimensional weight charges and increased rates, partially offset by lower fuel surcharges.
“Operating income decreased slightly due to increased self–insurance reserves, and higher-than-expected operating costs due in part to larger package sizes. These factors more than offset the benefits from higher revenue and one additional operating day.”
Revenue for the FedEx Freight segment was essentially flat at $1.6bn, and operating income was down 21% to $132m. “Operating results declined primarily due to salaries and employee benefits expense outpacing lower-than-anticipated volume,” commented FedEx.
