FedEx says 2Q net income up 76%

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FedEx Corp. on Thursday, Dec. 15, reported FedEx Corp. reported the following consolidated results for the second quarter of 2012 fiscal year ended Nov. 30:
• Revenue of $10.59 billion, up 10 percent from $9.63 billion the previous year;
• Operating income of $780 million, up 66 percent from $469 million;
• Operating margin of 7.4 percent, up from 4.9 percent; and
• Net income of $497 million, up 76 percent from $283 million.

The Memphis, Tenn.-based company attributed its improved operating results to the continued strong performance of FedEx Ground driven by higher yields and volumes, as well as a significant improvement in profitability at FedEx Freight. The results for the quarter also reflect the positive year-over-year impact, predominately at FedEx Express, of a benefit from the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust. Last year’s operating income and margin were impacted by one-time charges at FedEx Express and FedEx Freight.

“Our improved performance was largely a result of effective yield management programs and strong demand for FedEx Home Delivery and FedEx SmartPost services,” said Frederick Smith, FedEx Corp. chairman, president and chief executive officer. “With the healthy growth in online shopping this holiday season, demand is increasing for these residential delivery services.”

For the second quarter, the FedEx Freight segment reported:
• Revenue of $1.33 billion, up 9 percent from last year’s $1.22 billion;
• Operating income of $40 million compared with an operating loss of $91 million; and
• Operating margin of 3.0 percent, up from -7.5 percent the previous year.

The company said less-than-truckload yield increased 8 percent primarily due to higher LTL fuel surcharges and ongoing yield management actions, which reduced LTL average daily shipments by 3 percent. FedEx Freight implemented a 6.75 percent general rate increase on Sept. 6.

Operating income in the quarter was driven by strong yield growth and ongoing efficiency improvement resulting from the Jan. 30 combination of the FedEx Freight and FedEx National LTL operations. The operating loss in the prior year largely resulted from $86 million of one-time costs associated with the LTL network combination.