FDX FedEx Corp

By Patrick Thomas 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 20, 2018).

FedEx Corp. profit jumped in the latest quarter as the company benefited from tax cuts and a turnaround in its express business.

Chief Executive Fred Smith said on an earnings call on Tuesday that he is optimistic about the company's future, but he warned about the potential impact of escalating tensions between the U.S. and trading partners.

"Trade is a two-way street, and FedEx supports lowering trade barriers for our customers, not raising them," he said.

Operating income in FedEx's express business increased 11% to $990 million in the quarter. The results followed a disappointing holiday season in which that segment posted a steep profit decline.

In the ground business, income increased 18% to $832 million for the period. FedEx had been investing in automating its ground unit, which sped up its service and posted strong gains in the previous quarter.

The Memphis-based company got a $1.6 billion windfall from the Trump administration's Tax Cuts and Jobs Act passed at the end of 2017. FedEx, which had been a vocal supporter of the new law, said the tax cuts also led to pay increases for certain U.S. hourly workers that began in April.

Rival United Parcel Service Inc. has been ramping up spending to automate more of its facilities and handle the surge of e-commerce packages. FedEx, which has been ahead of UPS in modernizing its systems, on Tuesday said it is reducing capital expenditures in its ground unit and that it likely won't ramp up expenditures in its express business until 2020 or 2021.

Revenue increased about 10% to $17.3 billion for the quarter. FedEx's total revenue for the year rose about 9% from the previous year to $65.5 billion.

FedEx said it expects revenue to increase 9% in the coming year.

(END) Dow Jones Newswires

June 20, 2018 02:47 ET (06:47 GMT)

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