FDX EARNINGS SLIP DUE TO FUEL, SLOWER GROWTH
FDX Corp., the Memphis-based parent company of Federal Express and RPS,
said net earnings in its second quarter fell 6.6 percent from last year, mainly due to
higher fuel costs and slower domestic package growth at FedEx.
FDX earned $171 million in the quarter ended Nov. 30, on an 8.6-percent
increase in revenue to $4.6 billion. Year-to-date earnings were flat at $330 million,
while revenue rose 7.2 percent to $8.9 billion.
Higher fuel costs trimmed FedEx’s second-quarter operating income by $55
million. Fuel prices have risen from 51 cents a gallon last year to more than 80 cents a
gallon this year, FDX said. The company expects fuel to negatively impact its annual
results by more than $200 million.
FDX said it will consider implementing a fuel surcharge if fuel prices
rise or continue to stay above 80 cents a gallon. "We simply do not have 85-cent fuel
prices built into our cost structure, and if fuel prices stay high, we are going to have
to look at it," said Alan B. Graf Jr., FDX executive vice president and chief
The bright spot in FDX’s results showed up in the international arena.
Average international priority package volume was up 13 percent to 322,814 packages a day,
and outbound Asian volumes increased more than 30 percent, Graf said.
In the second quarter, RPS reported an 8.2 percent increase in operating
income to $66 million on an 8.3 percent rise in revenue to $521 million. FDX’s other
subsidiaries, including its logistics unit, reported a combined 12 percent increase in
operating income to $28 million on a 27.2 percent jump in revenue to $313 million.