FedEx says 1Q net income down 22%

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FedEx Corp. today, Sept. 18, reported net income of $384 million for the first quarter ended Aug. 31, down 22 percent from last year’s $494 million. Revenue was $9.97 billion, up 8 percent from $9.20 billion a year ago. Operating income was $630 million, down 23 percent from $814 million last year.

“Global economic conditions are challenging, but FedEx is taking strong, proactive actions to manage through this difficult cycle,” said Frederick W. Smith, chairman, president and chief executive officer of Memphis, Tenn.-based FedEx Corp. “We are committed to implementing strategies that will enhance the customer experience, gain market share, reduce expenses, improve profits and ensure the long-term success of the company.”

Total combined average daily package volume in the FedEx Express and FedEx Ground segments grew 1 percent year over year for the quarter. Growth in ground, FedEx SmartPost and international domestic express shipments was substantially offset by a continued decline in U.S. domestic express shipments.

Operating results declined, as strong cost management actions were more than offset by global economic weakness, higher fuel prices and the related negative effects of higher fuel surcharges. One fewer operating day at each of the transportation segments also negatively affected results. While fuel prices decreased from historic highs late in the quarter, the average price of jet fuel was up 77 percent year over year.

FedEx expects earnings to be $1.40 to $1.60 per diluted share in the second quarter compared to $1.54 a year ago. For the full year, the company reaffirms its earnings estimate of $4.75 to $5.25 per diluted share, which reflects weaker global macroeconomic conditions. This guidance incorporates current fuel prices and the related impact on fuel surcharges, which are reducing demand for FedEx services and adversely affecting base rates across the company’s transportation segments. Management has reduced the company’s capital plan to $2.6 billion for fiscal 2009.

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FedEx Express also announced that it will increase shipping rates by an average of 6.9 percent for U.S. and U.S. export services, effective Jan. 5, 2009. The rate increase will be partially offset by adjusting the fuel price at which the fuel surcharge begins, reducing the fuel surcharge by two percentage points. Additional changes will be made to other FedEx Express surcharges, details of which can be found at The FedEx Ground rate and surcharge increases for 2009 will be announced later this year.