FedEx’s first quarter profits marginally rise

FedExÆs first quarter profits marginally rise    FedEx Corp. said net profit for its fiscal first quarter ended Aug. 31 rose 3 percent to $339 million from $330 million in the same quarter last year.
   The Memphis-based company reported operating income of $584 million, up 1 percent from $579 million in the same period of the previous fiscal year. Revenue increased 10 percent to $7.71 billion from $6.98 billion.
   FedEx said Hurricane Katrina had no significant effect on its first quarter results, although the storm inflicted some damage to facilities in the U.S. Gulf Coast region.
   Revenue for FedEx Express was up 11 percent to $5.12 billion from $4.62 billion. The unit’s operating income dropped 8 percent to $285 million from $310 million, with an operating margin of 5.6 percent compared to 6.7 percent the previous year. FedEx Express’ first quarter operating income was negatively affected by a one-time, non-cash charge of $75 million recorded primarily to adjust the accounting for rent escalation terms in certain facility leases, FedEx said.
   FedEx Express’ international sales increased 13 percent, while average daily package volume grew 6 percent. Yield was up 7 percent thanks to higher fuel surcharges and package weights, as well as favorable exchange rates, FedEx said. Domestic package yield grew 3 percent with a 4 percent rise in daily package volume.
   FedEx Ground’s operating income increased marginally to $148 million from $147 million. Revenue rose 14 percent to $1.22 billion from $1.07 billion. Average daily package volume improved 6 percent. Yield improved 6 percent primarily due to a January general rate increase, higher service revenues, and re-implementation of a fuel surcharge.
   Operating income at FedEx Freight rose 31 percent to $135 million, compared to $103 million in the comparable year-earlier period. Revenue was $892 million, up 11 percent from the $807 million posted in the same quarter last year. The company achieved an operating margin of 15.1 percent compared to 12.8 percent in the previous year period. Average daily shipment volume increased 2 percent. The less-than-truckload carrier improved yield 10 percent due to incremental fuel surcharges, higher rates and growth in interregional freight service, FedEx said.
   FedEx forecast $2.5 billion in capital spending in 2005.