FedEx posts 8 percent net gain in 2Q
FedEx today reported continued strong profitability in the second quarter ended Nov. 30 despite increased costs associated with a new labor contract for its pilots that reduced earnings by 25 cents per share.
The Memphis-based express delivery and supply chain services company said operating income rose 6 percent to $839 million on the strength of a 10 percent increase in revenue to $8.93 billion compared to the same period last year. Net income increased 8 percent to $511 million.
FedEx said earnings were better than forecast primarily due to lower than expected fuel prices, slightly stronger than anticipated growth at FedEx Ground, and insurance proceeds related to Hurricane Katrina.
FedEx Ground led the pack within FedEx with a 14 percent improvement in daily package volume due to increased commercial business and growth in the Home Delivery service, FedEx said. Ground operating income increased 17 percent to $191 million.
Operating margin was slightly higher due to revenue growth, improved operating results at FedEx SmartPost and lower fuel costs, which more than offset increased network expansion and legal costs. FedEx is fending off a class-action suit by Ground workers who claim they should be treated as employees rather than independent contractors.
FedEx Express saw revenues rise 6 percent to $5.69 billion and operating income grow 5 percent to $502 million, but much of the improvement was due to favorable exchange rates and domestic rate increases. International package volumes grew 6 percent while domestic package volumes declined 1 percent.
FedEx Freight incorporated the acquisition of Watkins Motor Freight and experienced a 28 percent increase in less-than-truckload shipments, resulting in revenue of $1.23 billion, up 31 percent from a year ago.
“Package volumes are solid this holiday season, and we see continued global economic growth in 2007,' Chairman Fred Smith said.
FedEx posts 8 percent net gain in 2Q
