FedEx Corp. reports lower 3Q net income, higher revenue

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FedEx Corp. today, March 20, reported the following consolidated results for the third quarter:

  • Revenue of $9.44 billion, up 10 percent from $8.59 billion the previous year;
  • Operating income of $641 million, unchanged from a year ago;
  • Operating margin of 6.8 percent, down from 7.5 percent the previous year; and
  • Net income of $393 million, down 6 percent from last year’s $420 million.
  • “FedEx faces a challenging economic environment that includes persistently high oil prices, sluggish U.S. growth and continued concerns in the credit markets,” said Frederick W. Smith, chairman, president and chief executive officer of Memphis, Tenn.-based FedEx Corp. “We are managing our costs while positioning our portfolio of global transportation solutions to increase our profitability and returns once conditions improve.”

    For the third quarter:

  • The FedEx Express segment reported revenue of $6.13 billion, up 11 percent from last year’s $5.52 billion; and operating income of $425 million, up 8 percent from $395 million a year ago.
  • The FedEx Ground segment reported revenue of $1.72 billion, up 13 percent from last year’s $1.52 billion; and operating income of $170 million, down 13 percent from $196 million a year ago.
  • The FedEx Freight segment reported revenue of $1.16 billion, up 5 percent from last year’s $1.10 billion; and operating income of $46 million, down 8 percent from $50 million a year ago.
  • FedEx Corp. reported the total combined average daily package volume in the FedEx Express and FedEx Ground segments grew 5 percent year over year for the quarter, due primarily to growth at FedEx Ground, FedEx International Priority and an increase in international domestic express shipments, resulting primarily from recent international acquisitions.

    Third-quarter operating margins declined, as higher fuel prices and a weak U.S. economy limited demand for U.S. domestic express, less-than-truckload, and copy and print services. The costs of retail service enhancement initiatives, increased marketing and technology expenses and higher expenses at FedEx Ground more than offset the benefits from lower variable compensation and favorable exchange rates, the company said.

    “Our fourth-quarter earnings outlook has been impacted by higher-than-anticipated fuel prices and a weak U.S. economy,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “Looking ahead to our fiscal 2009, we are expecting a continuation of fourth-quarter trends, which would result in limited earnings growth next year. We are scrutinizing all expenses and investments to realign them with the current environment.”

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