The Memphis, Tenn.-based integrator posted a net income of $715 million on revenues of $14.7 billion for the first quarter of fiscal year 2017, which ended Aug. 31, year-over-year increases of 3.3 percent and 19.5 percent, respectively.
FedEx Corp.’s earnings for first quarter of its fiscal year 2017, which ended Aug. 31, beat consensus analyst expectations, according to the company’s most recent financial statements.
The Memphis, Tenn.-based integrator posted a net income of $715 million on revenues of $14.7 billion for the quarter, year-over-year increases of 3.3 percent and 19.5 percent, respectively.
After adjusting for expenses associated with the integration of TNT Express, outlook restructuring program costs, and intangible asset amortization expenses, FedEx said earnings stood at $780 million, a 12.7 percent increase from the same period a year earlier. In late May, FedEx officially completed its 4.4 billion euro (U.S. $4.9 billion) purchase of the Netherlands-based global express carrier.
Adjusted diluted earnings per share (EPS) stood at $2.90, surpassing analyst expectations of $2.78 per share. On a non-adjusted basis, EPS increased from to $2.65 per share in Q1 fiscal 2017 from $2.42 per share a year earlier.
“The integration of TNT Express is proceeding smoothly, and the level of team members’ engagement is outstanding,” FedEx Chairman, President and CEO Frederick W. Smith said of the results. “Managing our operating companies as a portfolio of customer solutions helped FedEx achieve strong financial and operating results in the quarter, especially given the global economy’s continued low growth.”
The company saw operating income at the FedEx Express segment jump 14.5 percent year-over-year to $624 million for the first quarter of its fiscal 2017, with operating results improving due to improved base yields, higher package volumes and increased freight pounds. U.S. domestic package volumes ticked up 1 percent for the quarter, as did FedEx International Economy shipments, while FedEx International Priority volumes slipped 1 percent from the prior-year period. Average daily freight pounds increased 8 percent due to higher U.S. Postal Service volumes. The Express segment’s revenues were relatively flat, inching up just 1.1 percent to $6.66 billion compared with Q1 FY2016.
The TNT Express unit, on the other hand, reported an operating loss of $14 million in the first fiscal quarter on revenues of $1.8 billion. After adjusting for $28 million of intangible asset amortization expenses and $20 million of integration and outlook restructuring program costs, operating income for TNT Express stood at $34 million.
Meanwhile, the FedEx Ground unit posted an operating income of $610 million for the quarter, up 14 percent from the same fiscal 2016 period. Ground revenues grew 12 percent year-over-year to $4.29 billion, thanks to a 10 percent bump in average daily shipment volumes, driven primarily by growth in e-commerce and commercial packages.
Operating income for the FedEx Freight segment ticked up 2 percent to $135 million for the first quarter, as revenues grew 4 percent to $1.66 billion. The higher revenues were driven by an 8 percent bump in less-than-truckload (LTL) average daily shipments, which more than offset the impact of lower fuel surcharges and weight per shipment.
FedEx said Monday all three of its major subsidiaries will increase shipping rates, effective Jan. 2, 2017. FedEx Express will increase shipping rates by an average of 3.9 percent, while FedEx Ground, FedEx Home Delivery and FedEx Freight will increase shipping rates by an average of 4.9 percent.
Looking forward to the rest of fiscal 2017, because the company is unable to forecast end-of-year mark-to-market pension accounting adjustments, FedEx said it could only provide adjusted earnings guidance. The parcel carrier projected adjusted EPS of between $10.85 per diluted share and $11.35 per diluted share before mark-to-market pension accounting adjustments, but including TNT Express results.
Excluding TNT Express-related integration expenses, outlook restructuring program costs and intangible asset amortization, FedEx projects earnings of $11.85 per diluted share to $12.35 per diluted share for the full 2017 fiscal year. Capital expenditures for the year are expected to reach $5.6 billion, up 16.7 percent from $4.8 billion in fiscal 2016.
“Our team is extremely excited about the TNT Express integration, and we are discovering many possibilities for achieving high returns,” said Alan B. Graf, executive vice president and chief financial officer. “As we integrate these networks and take advantage of the unmatched road capabilities of TNT Express, I am confident there is going to be a tremendous opportunity to increase the earnings of FedEx Corporation.”
For the full fiscal 2016 year, ended May 31, FedEx reported a net income of $1.82 billion ($6.51 per diluted share) on revenues of $50.4 billion, year-over-year increases of 73.3 percent and 6.1 percent, respectively.
FedEx Q1 FY2017 earnings beat expectations
