FEDEX SEES 26% JUMP IN SECOND-QUARTER EARNINGS
FedEx Corp. saw its fiscal second-quarter net income jump 26 percent to $245 million, boosted by a $116 million in compensation from the Air Transportation Safety and System Stabilization Act.
Operating income for the period ending Nov. 30 was $433 million, also up 26 percent, on revenue of $5.14 billion, up 5 percent from the year-earlier period.
Besides the compensation, which covered operational disruptions following the Sept. 11 terrorist attacks, FedEx benefited from 'a state tax settlement at FedEx Express, lower net fuel expense, improved productivity at FedEx Ground and more pounds than anticipated from the U.S. Postal Service transportation agreement,' said Alan B. Graf Jr., executive vice president and chief financial officer.
FedEx Express saw operating income of $309 million, up 14 percent, which included the $116 million in compensation. Revenue slipped 4 percent, to $3.81 billion.
The FedEx unit saw U.S. domestic express activity slide 10 percent while package volume from its FedEx International Priority service fell 6 percent. Composite package yield for the quarter was flat year-over-year.
FedEx Ground's operating income climbed 40 percent to $57 million, while revenue rose 16 percent to $677 million. The unit's volume growth rates improved in October and November, finishing the quarter up 11 percent. About half of that growth came from FedEx Home Delivery, which expanded its coverage to 80 percent of the U.S. population last September. The service will expand to cover 90 percent in February, FedEx said.
FedEx Freight, the less-than-truckload motor carrier unit that merged American Freightways and Viking Freight, reported operating income of $47 million on revenue of $487 million.
FedEx Corp. anticipates a less-favorable third quarter, due to the recession, lingering effects of the Sept. 11 attacks, higher maintenance costs, reduced fuel surcharge revenue and a continued decline in package volumes.
'Our outlook for FedEx Express is for U.S. domestic shipments to be down about 2 percent' in the third quarter, Graf said. 'In the fourth quarter, FedEx Express U.S. domestic average daily package volume is expected to be about flat year-over-year. FedEx Ground, third quarter volume is expected to grow about 16 percent. As a result, we now expect earnings for the third quarter to be 25 cents to 35 cents per diluted share, and earnings for the fourth quarter to be 70 cents to 80 cents.'