FedEx Posts Higher First-Quarter Profit

By Mani
Updated on

FedEx Corporation (NYSE:FDX) posted bigger fiscal first-quarter profit at $489 million from $459 million, reported in the year-ago period.

FedEx Posts Higher First-Quarter Profit

FedEx is considered an economic bellwether as it moves massive volume of goods around the world. It posted $1.53 a share for the first-quarter ending August 31, up from $1.45 a share last year.

FedEx Beats Analysts Estimates

FedEx Corporation (NYSE:FDX) revenue rose 2 percent to $11 billion up from $10.8 billion posted a year earlier.

According to a consensus estimates from Thomson Reuters, analysts anticipated FedEx to report earnings excluding items of $1.50 a share from $10.97 billion revenue.

Echoing confidence on FedEx Corporation (NYSE:FDX)’s first-quarter performance, its chairman, president and chief executive officer Frederick W. Smith indicated the company remains focused on reducing costs while facing challenging global economic conditions. Besides this, he indicated FedEx Ground continues to generate strong profitability on growing customer demand for its services.

Cost Trimming Initiatives

Last year, FedEx Corporation (NYSE:FDX) initiated steps to trim costs by $1.7 billion as customers opt for cheaper shipping. Towards this initiative, the company is parking older planes sooner, trimming capacity to Asia and eliminating 3,600 jobs through buyouts.

While revealing its results for the year ending May 31, FedEx indicated it was planning further capacity cuts on top of a series of accelerated retirements of aircraft. Besides last year, FedEx warned that it was suffering from customers’ growing preference for its cheaper FedEx Ground services over its more expensive air offerings and for slower delivery of air packages.

Contrasting Signals From Rival UPS

FedEx Corporation (NYSE:FDX) reaffirmed its full-year earnings per share growth forecast of 7 percent to 13 percent from last year’s adjusted results. FedEx outlook factors in market outlook for fuel prices is 2.1 percent growth in U.S. gross domestic product and 2.6 percent for world GDP growth.

As opposed to FedEx positive forecast, in July, global logistics heavyweight United Parcel Service, Inc. (NYSE:UPS) slashed its profit forecast for the upcoming quarter. UPS cited weak U.S. industrial activity and air freight overcapacity.

FedEx Corporation (NYSE:FDX), the world’s largest air-cargo shipper by revenue, also announced that it would increase shipping rates by an average of 3.9 percent at its largest segment viz.: domestic express-shipping business.

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