FEDEX EARNINGS DOWN, BUT BEAT ANALYSTSÆ PREDICTIONS
FedEx Corp., the integrated shipping giant, on Wednesday reported a 4-percent drop in third-quarter net income, to $108 million. Despite the decline, FedEx fared better than analysts expectations.
Operating income was down 7 percent to $191 million while revenues rose 7 percent to $4.8 billion, for the period ending Feb. 28.
FedEx's earnings of 37 cents per diluted share bettered the 36-cents-a-share that analysts predicted.
“Our third quarter was challenging, as economic conditions worsened throughout the quarter,” said Alan B. Graf Jr., FedEx’s executive vice president and chief financial officer.
In December, the Memphis-based company forecast 'a soft economic landing' in its third and fourth quarters. However, 'market conditions deteriorated more than we anticipated,' Graf said. “Volume growth, yield growth, and weights for February dropped noticeably for all of our operating units.”
However, FedEx International Priority shipments continued to be the fastest growing portion of the business, with volume up 7 percent and rising 3 percent during the quarter. Growth softened in Asia from 26 percent in the first quarter to 7 percent in the third quarter, while European growth remained strong at 25 percent.
Federal Express, the express trucking unit, reported operating income of $160 million, up 12 percent, on revenue of $3.79 billion, up 1 percent.
FedEx Ground, FedEx's ground delivery unit, saw operating income fall 54 percent, to $18 million, despite a 9-percent increase in revenue, to $529 million.
FedEx Freight, a new business unit comprising the company's less-than-truckload operations, reported operating income of $18 million on revenue of $337 million. These results include Viking Freight Inc. from the beginning of the quarter and two months of results from American Freightways Inc., which FedEx acquired for about $1.2 billion.