FedEx reports solid 2Q revenue, earnings growth

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FedEx Corp. today, Dec. 20, reported the following consolidated results for its second fiscal quarter of 2007, which ended Nov. 30:

  • Revenue of $8.93 billion, up 10 percent from $8.09 billion the previous year;
  • Operating income of $839 million, up 6 percent from $790 million a year ago;
  • Operating margin of 9.4 percent, down from last year’s 9.8 percent;
  • Net income of $511 million, up 8 percent from $471 million the previous year; and
  • Total combined average daily package volume at FedEx Express and FedEx Ground was up 7 percent year over year for the quarter, led by ground and international express package growth.
  • “FedEx continues to deliver outstanding financial results, and I am confident about our business going forward,” said Frederick W. Smith, chairman, president and chief executive officer of Memphis, Tenn.-based FedEx Corp. “Package volumes are solid this holiday season, and we see continued global economic growth in 2007.”

    The company also announced a net 3.5 percent average price increase on U.S. domestic and U.S. export express shipments, and a 4.9 percent average price increase on FedEx Ground services. These changes will be effective Jan. 1. The company also announced increases to various shipment surcharges.

    “Earnings for our second quarter were better than forecast primarily due to lower than expected fuel prices, slightly stronger than anticipated growth at FedEx Ground and insurance proceeds related to Hurricane Katrina,” said Alan B. Graf Jr., executive vice president and chief financial officer.

    “Our earnings guidance for the third quarter recognizes a difficult year-over-year comparison, as last year’s third quarter benefited from the timing lag that exists between when we purchase fuel and when our indexed fuel surcharges automatically adjust,” Graf said. “December 2005 fuel surcharges at FedEx Express and FedEx Ground were set during the period fuel prices had spiked following Hurricane Katrina. We remain optimistic that we will continue to improve full-year margins and returns during a period of moderate economic growth.”