FedEx profits boosted by “very successful” festive season
FedEx boss Frederick W Smith said today that his company’s peak season proved “very successful”. The Memphis-based express delivery giant issued its latest results this morning, revealing revenue up 4% year-on-year and net income up 53% compared to last year’s more troublesome third quarter.
Revenue came in at $11.7bn, with net income jumping to $580m.
FedEx said its operating results improved because of volume growth across its three transportation segments.
The company’s third quarter benefited from reduced pension expenses and less costs from difficult weather conditions compared to the winter of 2013.
“We had a very successful peak season as volumes grew across all transportation segments, and our profit improvement programs are moving ahead as scheduled,” said Smith, the FedEx Corp. chairman, president and chief executive officer. “We believe our strategy is sound, our culture is unique, and our customers value our broad portfolio of business solutions.”
FedEx chief financial officer Alan B Graf said today that the company was expecting record earnings in its fourth quarter.
Among the FedEx divisions, FedEx Express saw its revenue flat compared to last year’s third quarter, on $6.66bn, but operating income more than doubled to $384m.
Revenue was hit by currency movement and lower fuel surcharges. US domestic volumes grew 4% year-on-year, with 5% growth in overnight box deliveries, while on the international side the company achieved 4% growth in FedEx International Economy, but the premium service FedEx International Priority saw volumes flat compared to the same period a year ago.
Better weather this year helped profit levels, along with company efforts to improve operating margins.
FedEx Ground saw its revenue up 12% compared to the same period a year ago, to $3.39bn, with operating income up 14% year-on-year to $558m.
The division saw average daily volumes up 7% in the quarter thanks to home delivery services as well as business-to-business growth. Price increases helped improve revenue-per-package by 3% year-on-year.
The division’s e-commerce-specialist FedEx SmartPost service, run in partnership with the Postal Service, saw its daily volumes up 7%, even after the loss of a major customer. The loss of the major customer helped improve its revenue per package by 8%.
FedEx Freight saw its revenue up 6% year-on-year to $1.43bn, with operating income almost doubling to $68m thanks to volume growth and better profitability of less-than-truckload shipments.