FedEx Corp. Reports Higher Third Quarter Earnings

FedEx Corporation (NYSE: FDX) today reported earnings for the quarter ended February 28 of $0.39 per diluted share, up 5% from $0.37 per diluted share in last year's third quarter.

The consolidated results for FedEx Corporation in the third quarter include:

Revenue of $5.02 billion, up 4% from $4.84 billion the previous year
Operating income of $237 million, up 24% from $191 million a year ago
Net income of $120 million, up 11% from last year's $108 million
"We are effectively executing our strategy in a challenging economic environment," said Alan B. Graf, Jr., executive vice president and chief financial officer. "Strong revenue and profit growth at FedEx Ground, solid cost control efforts at FedEx Express and improved productivity across our core operating companies benefited the company this quarter. Our sales and marketing forces are effectively cross-selling the diverse FedEx portfolio of services, particularly to small- and medium-sized businesses. In addition, the expanded scope of the FedEx Home Delivery network, coupled with the improved service of the FedEx Ground network, is enabling the company to capture additional ground business."

The company stated that it expects fourth quarter volume at FedEx Ground to grow about 16% year-over-year. The company has refined its fourth quarter year-over-year volume outlook for FedEx Express and estimates that its U.S. domestic average daily package volume will be down approximately 2% and FedEx International Priority® shipments will be down about 1%. FedEx Express derives a significant portion of its U.S. domestic express business from the manufacturing and wholesale sectors. These sectors continue to be weaker than the U.S. economy as a whole on a year-over-year basis and the company expects that once they rebound, Express' volumes will improve.

The company continues to believe that earnings for the fourth quarter will be $0.70 to $0.80 per diluted share, compared to $0.64 per share a year ago excluding charges associated with curtailing certain aircraft modification and development programs and reorganizing operations at FedEx Supply Chain Services. The fourth quarter results will include the negative effect of the recent increase in jet fuel prices and the lag between jet fuel costs and the surcharge adjustment based on the FedEx Express fuel price index. FedEx remains free cash flow positive for the year-to-date period and expects to be free cash flow positive for the full year–a significant milestone.

Since the company announced its share repurchase program in September 2001, 2.2 million of the 5.0 million shares authorized for repurchase have been acquired.

FedEx Express

For the third quarter, FedEx Express reported:

Revenue of $3.78 billion, about even with last year's $3.79 billion
Operating income of $145 million, down 9% from $160 million a year ago
FedEx Express U.S. domestic average daily package volume declined 5% year-over-year for the third quarter while package volume from its FedEx International Priority service was down about 2%. Helping offset package volume trends was continued strong growth in weight related to the U.S. Postal Service transportation agreement. Express composite package yield for the quarter was down 2% year-over-year, primarily due to reduced fuel surcharges and to exchange rates. A decline in average weight per package was offset by an improving yield per pound.

In January, the company began the second phase of its program to place FedEx Express drop boxes outside the most frequently visited U.S. Post Offices. FedEx expects to increase the number of drop boxes at Post Offices by about 50% to more than 7,500 boxes by May 31, 2002.

FedEx Ground

For the third quarter, which included one less operating day than last year, FedEx Ground reported:

Revenue of $668 million, up 26% from last year's $529 million
Operating income of $69 million, up 283% from $18 million a year ago
FedEx Ground volume growth accelerated in the quarter, increasing 21% year-over-year due to strong customer demand. The volume growth was primarily in its core business-to-business shipments, with additional growth coming from the company's expanding FedEx Home Delivery operation. Yield increased 6%.

In February, FedEx Ground opened 31 Home Delivery facilities, expanding coverage of the industry's only residential service backed by a money-back guarantee to about 90% of the U.S. population. Another 47 Home Delivery locations are scheduled to open in September 2002, which will extend Home Delivery services to nearly all U.S. addresses.

FedEx Freight

For the third quarter, FedEx Freight reported:

Revenue of $440 million, compared to $337 million a year ago
Operating income of $20 million, compared to last year's $18 million
FedEx Freight results for last year's third quarter included Viking Freight from the beginning of the quarter and two months of results from American Freightways.

FedEx Freight continued to make competitive gains during the quarter. The company believes its recently announced decision to rebrand Viking Freight and American Freightways as FedEx Freight over a three-year period will solidify its position as the largest regional LTL carrier in the U.S.

Corporate Overview

With annual revenues of $20 billion, FedEx Corp. is the premier global provider of transportation, e-commerce and supply chain management services. The company offers integrated business solutions through a network of subsidiaries operating independently, including: FedEx Express, the world's largest express transportation company; FedEx Ground, North America's second largest provider of small-package ground delivery service; FedEx Freight, the largest U.S. provider of regional less-than-truckload freight services; FedEx Custom Critical, the world's largest provider of expedited time-critical shipments; and FedEx Trade Networks, a provider of customs clearance, international freight forwarding and trade facilitation.

Additional information and operating data are contained in the company's annual report, Form 10-K, Form 10-Qs and third quarter FY2002 Statistical Book. These materials, as well as a Webcast of the earnings release conference call to be held at 10:30 a.m. EST on March 20, are available on the company's Web site at www.fedex.com/us/investorrelations. A replay of the conference call Webcast will be posted on our Web site following the call and will remain available for approximately two weeks.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management's views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, any impacts on the company's business resulting from the events that occurred on September 11, 2001 and the timing and amount of any money that FedEx is entitled to receive under the Air Transportation Safety and System Stabilization Act, as well as general economic and competitive conditions in the markets we serve, matching capacity to volume levels and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC.

table with full details: P:LIBRARYCourier Express ParcelsFedex 3rd qtr 02 results.htm