U.S. trucking market acts as drag on FedEx earnings
Express parcel carrier and logistics provider FedEx on Thursday reported strong first quarter earnings of $494 million, a 4 percent increase from the same period in 2006, equal to $1.58 per diluted share compared to $1.53 per share.
The Memphis-based company said its results were bolstered by a healthy global economy despite the drag in the U.S. business environment.
Corporate revenues and operating income were up 9 percent to $9.2 billion and 4 percent to $814 million, respectively.
FedEx cautioned that FedEx Freight, its domestic trucking unit, dragged down operating margins to 8.8 percent from 9.2 percent, despite margin increases at FedEx Express and FedEx Ground. FedEx Freight's operating margin dropped to 8.5 percent from 14.8 percent a year ago.
The trucking industry has been heavily hit by the downturn in manufacturing the past year. The company said the domestic economic impact on the less-than-truckload industry has forced the company to reduce its earnings forecast for the entire fiscal year by 4 percent.
Total combined average daily package volume in the FedEx Express and FedEx Ground segments grew 8 percent year over year for the quarter, due to growth in ground and international express shipments. The increase in international domestic express shipments resulted primarily from recent international acquisitions.