FedEx Corporation (FedEx Express) (Memphis) today reported earnings of $1.39 per diluted share for the second quarter ended November 30, compared to $1.57 per share last year. Superstorm Sandy impacted the quarter’s results by $0.11 per diluted share due to reduced shipment volumes and incremental operating costs.
Second Quarter Results:
FedEx Corp. reported the following consolidated results for the second quarter:
• Revenue of $11.1 billion, up 5% from $10.6 billion the previous year
• Operating income of $718 million, down 8% from $780 million last year
• Operating margin of 6.5%, down from 7.4% the previous year
• Net income of $438 million, down 12% from last year’s $497 million
The results of the quarter also reflect, primarily at FedEx Express, the net year-over-year negative impact from the timing lag that exists between when fuel prices change and indexed fuel surcharges automatically adjust.
FedEx Express Segment:
For the second quarter, the FedEx Express segment reported:
• Revenue of $6.86 billion, up 4% from last year’s $6.58 billion
• Operating income of $230 million, down 33% from $342 million a year ago
• Operating margin of 3.4%, down from 5.2% the previous year
Revenue increased primarily due to this year’s business acquisitions and growth at FedEx Trade Networks, as core express revenue growth was constrained by global economic conditions and the impact of Superstorm Sandy.
U.S. domestic revenue per package grew 1% as higher rate per pound was partially offset by lower fuel surcharges. U.S. domestic average daily package volume declined 2%. FedEx international export average daily package volume grew 6% driven by increases in FedEx International Economy®(IE) from Europe and Asia and by increases in FedEx International Priority® (IP) from Asia. Higher growth in international deferred services continued, with IE volume growing 14%, while IP volume increased 3% during the quarter. International export revenue per package fell 4% due to the demand shift toward lower-yielding international services and lower fuel surcharges.
Operating income and margin were lower due to the demand shift toward lower-yielding international services, the negative year-over-year impact of net fuel changes, increased depreciation expense, the effects of Superstorm Sandy and higher pension costs. These were partially offset by the favorable impact of cost containment actions.
FedEx Express has entered into an agreement to purchase four additional 767-300 freighters as part of the company’s continued fleet modernization efforts. This brings the total 767-300 orders to 50, with deliveries beginning in fiscal 2014. In concert with this commitment, two 777 freighter deliveries were deferred from fiscal 2015 to fiscal 2016 in order to better match capacity timing to global demand.
Copyright Photo: Brian McDonough. Boeing 777-FS2 N853FD (msn 37724) makes a fuel stop at Anchorage.