FedEx ups profit by 23%, invests in e-commerce

MEMPHIS, TN- Trucking and package delivery giant FedEx Corp. reported a 23-percent jump in profit for its fiscal year second quarter.

“FedEx posted strong results and a higher operating margin in the second quarter, with continued growth in volumes and base yields in each of our transportation segments,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer.

Revenue during the period totaled $11.9 billion, up five-percent from $11.4 billion the previous year, while operating income was $1.01 billion, up 22 percent from $827 million last year.

FedEx reaffirmed its 2015 earnings forecast of $8.50 to $9.00 per diluted share, an outlook that assumes continued moderate economic growth and a modest net benefit from fuel.

FedEx Freight reported:

  • Revenue of $1.59 billion, up 11 percent from last year’s $1.43 billion;
  • Operating income of $112 million, up 35 percent from $83 million a year ago;
  • Operating margin of 7.1 percent, up from 5.8 percent the previous year.

Less-than-truckload average daily shipments increased eight percent, including a 10-percent increase in demand for priority service, according to FedEx.

LTL revenue per shipment grew three percent due to higher weight per shipment, higher rates and increased fuel surcharges. Operating results improved due to increased LTL revenue per shipment and higher average daily LTL shipments.

FedEx Express reported:

  • Revenue of $7.02 billion, up three from last year’s $6.84 billion;
  • Operating income of $484 million, up 36 percent from $357 million a year ago;
  • Operating margin of 6.9 percent, up from 5.2 percent the previous year.

Revenue increased due to higher U.S. domestic package volume and international export package base revenue, partially offset by lower fuel surcharges and exchange rates, FedEx said. U.S. domestic package volume grew by seven percent, including a 10 percent increase in U.S. overnight box shipments. U.S. domestic revenue per package declined two percent due to decreased fuel surcharges and lower weight.

FedEx Ground reported:

  • Revenue of $3.06 billion, up eight percent from last year’s $2.85 billion;
  • Operating income of $465 million, up six percent from $439 million a year ago;
  • Operating margin of 15.2 percent, down from 15.4 percent the previous year.

FedEx Ground average daily volume grew five percent in the second quarter, driven by growth in both business-to-business and FedEx Home Delivery services, according to FedEx. Revenue per package increased three percent due to rate increases and higher residential surcharges.

Operating income increased due to higher revenue per package and volume, partially offset by higher network expansion costs.

E-commerce investments

FedEx announced it has bought Bongo International, a provider of services that enable cross-border e-commerce orders and shipments

The deal was announced a day after FedEx said it bought Pittsburgh-based logistics firm Genco, which specialized in product returns.

“We anticipate global e-commerce to continue on a double digit growth trajectory,” said T. Michael Glenn, FedEx executive VP, market development and corporate communications.

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