“Growth in overall demand for our broad global portfolio of solutions drove our improved first quarter results,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer.
“FedEx Express remains focused on reducing costs while facing challenging global economic conditions. Meanwhile, FedEx Ground continues to generate strong profitability on growing customer demand for its services.”
Group net income in the first quarter rose to US$489 million, up 7 percent from last year’s $459 million. Revenue also inched up, reaching $11 billion, up 2 percent from $10.8 billion the previous year.
Operating income of $795 million was an improvement of 7 percent from $742 million last year; operating margin was recorded at 7.2 percent, higher than the 6.9 percent of the previous year.
Per transportation division, the express segment reported revenue of $6.61 billion for the first quarter, down slightly from last year’s $6.63 billion due to lower fuel surcharge revenue and one less operating day.
The ground segment reported revenue of $2.73 billion, up 11 percent from the first quarter of last year’s $2.46 billion, due to continued growth in both home delivery and commercial business services.
On the other hand, the freight segment reported revenue growth of 2 percent to $1.42 billion, from last year’s $1.40 billion. Operating income amounted to $91 million, up 1 percent from $90 million a year ago, and operating margin of 6.4 percent was unchanged from the previous year.
Operating income improved due to higher weight per shipment, yield, and average daily shipments, overcoming the impact of one less operating day.
FedEx reaffirmed its forecast of full-year earnings growth of 7 percent to 13 percent from last year’s adjusted results.
“We remain confident in our full year earnings outlook despite tepid global economic growth,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “FedEx Express continued to execute on its profit improvement initiatives during our first quarter. We remain focused and are committed to FedEx Express achieving its $1.6 billion operating profit improvement target by the end of fiscal 2016.”
Meanwhile, FedEx Express announced plans to increase shipping rates by an average of 3.9 percent for U.S. domestic, U.S. export, and U.S. import services effective January 6, 2014. The FedEx Ground and FedEx SmartPost pricing changes for 2014 will be announced later this year. FedEx Freight implemented a 4.5 percent general rate increase on July 1, 2013.