FedEx first-quarter net up 3 percent

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FedEx Corp.’s first-quarter earnings rose 3 percent as a $79 million accounting charge dragged down the bottom line, but revenue jumped 10 percent on solid shipment growth.

The package-delivery and trucking giant raised its fiscal 2006 outlook and provided second-quarter guidance in line with Wall Street’s average expectations. FedEx said its earnings forecast range reflects the economic uncertainty surrounding the effects of Hurricane Katrina as well as continued volatility of fuel prices.

In a press release Wednesday, Sept. 21, FedEx said earnings for the first quarter ended Aug. 31 rose to $339 million, or $1.10 a share, from $330 million, or $1.08 a share, a year earlier. Excluding the charge, the company earned $1.25 a share.

FedEx’s June 23 forecast called for a first-quarter profit of $1.10 to $ 1.25 a share.

First-quarter revenue grew to $7.71 billion from $6.98 billion last year. The company experienced double-digit growth across several units, led by a 14 percent increase at the Ground division and an 11 percent rise in the Express segment.

Total combined average daily package volume at FedEx Express and FedEx Ground was up 5 percent in the first quarter, thanks to continued growth in international express, U.S. domestic express and ground shipments.

Katrina had no significant effect on first-quarter results, FedEx said, although the storm did inflict some damage to Gulf Coast facilities. The company’s operations have resumed in most affected areas, except New Orleans.

FedEx said it continues to expect economic expansion in the United States and the international markets despite uncertainty related to Katrina and other economic concerns. The company is predicting second-quarter earnings of $1.30 to $1.45 a share and a fiscal 2006 profit of $5.25 to $5.50 a share.

The latter outlook comes despite the $79 million lease-accounting charge in the first quarter and reflects an increase from the prior forecast of $5.20 to $5.45 a share. FedEx maintains its fiscal 2006 capital-spending view of $2.5 billion.