Fedex's Net Income Surges Amid Economic Recovery
By Rick Brooks Staff Reporter of The Wall Street Journal
FedEx Corp., lifted by strong gains in shipment volume across almost all its delivery businesses as the economic recovery reaches more of its customers, reported that its profit more than doubled in the fiscal first quarter.
Frederick W. Smith, chairman, president and chief executive of the Memphis, Tenn., company, said that the global economy "is expanding steadily," particularly in the manufacturing and industrial sectors. The latest results are evidence that more businesses around the world are revving up their operations and replenishing inventories depleted during the economic slump.
FedEx's average load of 5.5 million packages a day for its fiscal quarter ended Aug. 31 was up 6.4% from a year earlier, close to the 6.9% increase in FedEx's package volume during its fiscal fourth quarter. While air shipments in the U.S. continued to be hurt by a shift toward cheaper ground deliveries, deliveries outside the U.S. climbed 13%, including a 52% surge in export shipments from China.
As a result, FedEx's net income reached $330 million, or $1.08 cents a share, in the latest quarter, up from $128 million, or 42 cents a share, a year earlier. Revenue grew 23% to $6.98 billion. Last year's first quarter included costs of about $132 million, or 27 cents a share, related to the decision by about 3,600 of the air unit's 137,000 employees to quit or retire early in exchange for cash or sweetened pension and health-care benefits. FedEx also got a year-earlier boost of eight cents a share from a court ruling in its favor over the treatment of jet-engine maintenance costs.
The surge on FedEx's bottom line matched an upbeat forecast it issued last month. FedEx stuck to its projection Wednesday of a profit of $4.40 to $4.60 a share for its current fiscal year, and its expected profit of $1.10 to $1.20 a share in the current quarter is in line with the average estimate of $1.15 a share from analysts surveyed by Thomson First Call.
At FedEx's trucking operation, which consolidates loads of several customers at a time on trailers, shipment volume in the fiscal first quarter grew by its biggest percentage since FedEx began reporting that unit's results in 2001. Ground-delivery volume increased to 2.5 million packages a day, up nearly 16% from a year earlier.
Write to Rick Brooks at rick.brooks@wsj.com
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