Volume, Yield Growth Drive Improved Results
FedEx Corp. (NYSE: FDX) today reported earnings of $2.10 per
diluted share for the first quarter ended August 31, up 37% from
last year’s $1.53 per share.
“FedEx Corp. is off to an outstanding start in fiscal 2015,
thanks to very strong performance at FedEx Ground, solid volume and
revenue increases at FedEx Freight and healthy growth in U.S.
domestic volume at FedEx Express,” said Frederick W. Smith, FedEx
Corp. chairman, president and chief executive officer. “More
customers are relying on FedEx because they appreciate the
competitive advantages provided by our broad portfolio of
solutions.”
First Quarter Results
FedEx Corp. reported the following consolidated results for the
first quarter:
• Revenue of $11.7 billion, up 6% from $11.0
billion the previous year
• Operating income of $987 million, up 24%
from $795 million last year
• Operating margin of 8.5%, up from 7.2% the
previous year
• Net income of $606 million, up 24% from
last year’s $489 million
Operating income increased primarily due to higher volumes and
increased yields at all three transportation segments. Results in
the first quarter also include benefits from lower pension expense
and the company’s profit improvement programs. These benefits were
partially offset by higher aircraft maintenance expense due to the
timing of certain engine maintenance events.
During the quarter, the company acquired 5.3 million shares of
FedEx common stock. As of August 31, 2014, no shares remained under
the existing share repurchase authorizations. Share repurchases
benefited earnings in the quarter by $0.15 per diluted share.
Outlook
FedEx reaffirmed its fiscal 2015 earnings forecast of $8.50 to
$9.00 per diluted share. The outlook assumes no net year-over-year
fuel impact and continued moderate economic growth. The capital
spending forecast for fiscal 2015 remains $4.2 billion.
“FedEx reported strong first quarter results, as all three of
our transportation segments drove higher revenues and improved
profitability year over year,” said Alan B. Graf, Jr., FedEx Corp.
executive vice president and chief financial officer. “Our profit
improvement programs are progressing as planned and we continue to
expect strong earnings growth this year.”
2015 Rate Increases
As previously announced, FedEx Express, FedEx Ground and FedEx
Freight will increase shipping rates effective January 5, 2015.
FedEx Express will increase shipping rates by an average of 4.9%
for U.S. domestic, U.S. export and U.S. import services.
FedEx Ground and FedEx Home Delivery will increase shipping
rates by an average of 4.9%. In addition, as announced in May,
FedEx Ground will also begin applying dimensional weight pricing to
all shipments.
FedEx Freight will increase shipping rates by an average of
4.9%. This rate change applies to eligible FedEx Freight shipments
within the U.S. (including Alaska, Hawaii, Puerto Rico and the U.S.
Virgin Islands), between the contiguous U.S. and Canada, within
Canada, between the contiguous U.S. and Mexico, and within
Mexico.
Details of all changes to rates and surcharges are available at
fedex.com/us/2015rates.
Corporate Headquarters
Costs
Effective this fiscal year, the company ceased
allocating to its transportation segments the costs associated with
the corporate headquarters division. These costs are now included
in “Corporate, eliminations and other.” Prior year amounts in this
release have been revised to conform to the current
presentation.
FedEx Express Segment
For the first quarter, the FedEx Express segment reported:
• Revenue of $6.86 billion, up 4% from last
year’s $6.61 billion
• Operating income of $369 million, up 35%
from $273 million a year ago
• Operating margin of 5.4%, up from 4.1% the
previous year
Revenue increased due to higher U.S. domestic package volume and
international export package yields partially offset by lower
freight revenue. U.S. domestic package volume grew 5%, as 8% growth
in overnight and deferred box volume was partially offset by lower
envelope volume. U.S. domestic yield increased 1% from higher fuel
surcharges, changes in service mix and increased rates. FedEx
International Priority® volume grew 1%, while FedEx International
Economy® volume increased 3%. International export revenue per
package increased 3% due to fuel surcharges, higher rates and
weight per package.
Operating income and margin improved as higher U.S. domestic
package volume, improved international export yield and benefits
from profit improvement programs more than offset higher aircraft
maintenance expense and lower freight revenues.
FedEx Ground Segment
For the first quarter, the FedEx Ground segment reported:
• Revenue of $2.96 billion, up 8% from last
year’s $2.73 billion
• Operating income of $545 million, up 13%
from $483 million a year ago
• Operating margin of 18.4%, up from 17.7%
the previous year
FedEx Ground average daily volume grew 6% in the first quarter,
primarily driven by growth in e-commerce. Revenue per package
increased 3% due to increased rates and higher residential and fuel
surcharges. FedEx SmartPost average daily volume decreased 10% due
to the reduction in volume from a major customer. SmartPost revenue
per package increased 10% due to rate increases and improved
customer mix, partially offset by higher postage rates.
Operating income increased due to higher revenue per package and
volume, partially offset by increased network expansion costs.
FedEx Freight Segment
For the first quarter, the FedEx Freight segment reported:
• Revenue of $1.61 billion, up 13% from last
year’s $1.42 billion
• Operating income of $168 million, up 70%
from $99 million a year ago
• Operating margin of 10.4%, up from 7.0% the
previous year
Less-than-truckload (LTL) average daily shipments increased 11%,
including a 13% increase in demand for Priority service. LTL
revenue per shipment increased 3% due to higher weight per
shipment, increased fuel surcharge revenue and higher rates.
Operating results improved due to increased LTL revenue per
shipment, higher average daily LTL shipments and solid cost
management.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses
worldwide with a broad portfolio of transportation, e-commerce and
business services. With annual revenues of $46 billion, the company
offers integrated business applications through operating companies
competing collectively and managed collaboratively, under the
respected FedEx brand. Consistently ranked among the world's most
admired and trusted employers, FedEx inspires its more than 300,000
team members to remain "absolutely, positively" focused on safety,
the highest ethical and professional standards and the needs of
their customers and communities. For more information, visit
news.fedex.com.
Additional information and operating data are contained in the
company’s annual report, Form 10-K, Form 10-Qs and first quarter
fiscal 2015 Statistical Book. These materials, as well as a webcast
of the earnings release conference call to be held at 8:30 a.m. EDT
on September 17 are available on the company’s website at
investors.fedex.com. A replay of the
conference call webcast will be posted on our website following the
call.
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, economic
conditions in the global markets in which we operate, our ability
to execute on our profit improvement programs, legal challenges or
changes related to FedEx Ground’s owner-operators, new U.S.
domestic or international government regulation, the impact from
any terrorist activities or international conflicts, our ability to
effectively operate, integrate and leverage acquired businesses,
changes in fuel prices and currency exchange rates, our ability to
match capacity to shifting volume levels and other factors which
can be found in FedEx Corp.'s and its subsidiaries' press releases
and filings with the SEC.
The financial section of this release is provided on the
company's website at investors.fedex.com.
FedEx Corp.Media Contact:Jess Bunn, 901-818-7463orInvestor
Contact:Mickey Foster, 901-818-7468Home Page: fedex.com
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