FedEx’s profits up 33% in second quarter

FedEx’s profits up 33% in second quarter    Memphis-based FedEx Corp. posted a consolidated net profit of $471 million for its fiscal second quarter ending Nov. 30, up 33 percent compared to $354 million in the same quarter last year.
   The company reported operating income of $790 million, up 32 percent from $600 million in the same period of the previous fiscal year. Revenue increased 10 percent to $8.09 billion from $7.33 billion.
   Second quarter revenue for FedEx Express was up 11 percent to $5.37 billion from $4.83 billion. The unit’s operating income improved 43 percent to $476 million from $333 million, with an operating margin of 8.9 percent compared to 6.9 percent in the previous year.
   FedEx Express’ international sales increased 14 percent, while average daily package volume grew 8 percent. Yield was up 5 percent primarily due to higher fuel surcharges, FedEx said. Domestic package yield grew 7 percent with a 1 percent rise in daily package volume.
   FedEx Ground’s operating income increased 21 percent to $163 million from $135 million. Revenue rose 11 percent to $1.31 billion from $1.17 billion.
   Average daily package volume improved 4 percent. Yield improved 6 percent primarily due to the reintroduction of a fuel surcharge, higher extra service revenue and the impact of the January general rate increase.
   Operating income at FedEx Freight jumped 32 percent to $135 million, compared to $102 million in the comparable year-earlier period. Revenue was $932 million, up 14 percent from the $820 million posted in the same quarter last year. The company achieved an operating margin of 14.5 percent compared to 12.5 percent in the previous year period. Average daily shipment volume increased 5 percent. The less-than-truckload carrier improved yield 8 percent due to incremental fuel surcharges and higher rates, FedEx said.
   “Customer demand for our broad portfolio of transportation services, a disciplined pricing approach by FedEx and strong productivity gains led to a sharp improvement in our operating margins,” said Frederick W. Smith, FedEx’s chairman, president and chief executive officer, in a statement. “FedEx is also benefiting from solid economic growth year over year in the U.S. and Asian economies, which we expect to continue in 2006.”
   FedEx retained it forecast of $2.5 billion in capital spending for its fiscal year 2006.