FEDEX CORP. FIRST-QUARTER NET INCOME FALLS 36%

FEDEX CORP. FIRST-QUARTER NET INCOME FALLS 36%

   FedEx Corp. said Thursday it's fiscal first quarter net income fell 36 percent to $109 million, for the period ending Aug. 31.

   Revenues for the Memphis-based company rose 5 percent to $5.04 billion, while operating income fell 24 percent to $235 million.

   The first-quarter results included a $15-million, after-tax accounting charge. Excluding the charge, net income would have been $124 million, down 27 percent.

   Following the Sept. 11 terrorist attacks and temporary grounding of cargo flights substantially reduced FedEx Express' volumes. “Our volumes have not yet recovered to levels existing prior to the tragedy,” said Alan B. Graf Jr., executive vice president and chief financial officer. Although he said it was too difficult to fully assess the impact of last week's events, “we intend to continue to manage the company's cost structure to remain profitable in the second quarter and the remainder of fiscal 2002,” he said.

   FedEx Express saw operating income fall 53 percent to $121 million, while revenue declined 5 percent to $3.74 billion. The dip was blamed to weakened demand from the manufacturing and high-tech sectors.

   U.S. domestic average daily volume slipped 7 percent while volume from its FedEx International Priority Service was down 1 percent.

   FedEx Ground saw a 15-percent increase in revenue, to $623 million, and a 40-percent rise in operating income, to $60 million.

   “FedEx Ground experienced strong growth in both volumes and yields,” Graf said.

   FedEx Home Delivery, a unit of FedEx Ground, reported a loss of $9 million for the quarter, slightly down from last year. The FedEx Home Delivery network will be expanded to 80 percent of the U.S. population, beginning Sept. 25, as the unit will open 63 additional locations throughout the United States, including 56 co-located terminals with existing FedEx Ground facilities.

   FedEx Freight, the combined operations of Viking and American Freightways, saw revenue of $511 million and operating income of $50 million.

      “The addition of American Freightways in the second half of fiscal 2001 allowed us to report increased revenue during a period of virtually flat economic growth,” Graf said.