Mark Szakonyi, Associate Editor | Sep 18, 2012 10:43AM EDT
FedEx cut its fiscal year earnings forecast after more shippers chose slower service amid a slowing global economy, pulling down profit 1 percent year-over-year to $459 million in its fiscal first quarter.
The company said earnings could fall as much as 6 percent in the fiscal year that ends next May, assuming the outlook for fuel prices stay on track and excludes “the impact of cost-reduction programs currently under review.” Fred Smith, FedEx chairman, president and CEO, said the company is taking actions to cut cost and adjust networks to freight demand, but companywide capital spending for fiscal 2013 would remain at $3.9 billon.
Although the parcel giant’s revenue rose 3 percent year-over-year to nearly $10.8 billion, FedEx said the growth in deferred services “outpaced our near-term ability to reduce” the operating cost of the express business. FedEx’s operating income rose 1 percent to $742 million in the same period, while its operating margin fell 6.9 percent from 7 percent.
FedEx Express business grew 1 percent year-over-year to $6.6 billion, as the operating margin shrank to 3.3 percent from 4.4 percent. U.S. domestic average daily package volume declined 5 percent, while international export volume ticked up 1 percent. Higher pricing of U.S. domestic shipments was partially offset by lower fuel surcharges, keeping domestic revenue per package growth at 2 percent.
Unfavorable exchange rates changes and lower fuel surcharges pulled international export revenue per package down 4 percent year-over-year. International priority freight volume rose 2 percent, but revenue per pound declined 4 percent on unfavorable exchange rate exchanges and lower fuel surcharges.
FedEx Ground revenue increased 8 percent to nearly $2.5 billion, as the operating margin rose 18.1 percent from 17.9 percent on a year-over-year basis. Growth in business-to-business and FedEx Home Delivery services pushed up FedEx Ground volume 5 percent. Increased rates drove revenue per package up 2 percent.
Although FedEx Smart Post saw volume jump 18 percent on e-commerce sales, revenue per package slipped 1 percent largely because of higher postal rates. FedEx Freight saw revenue rise 5 percent to $1.4 billion, as less-than-truckload shipments rose 4 percent.
Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @Szakonyi_JOC.
The company said earnings could fall as much as 6 percent in the fiscal year that ends next May, assuming the outlook for fuel prices stay on track and excludes “the impact of cost-reduction programs currently under review.” Fred Smith, FedEx chairman, president and CEO, said the company is taking actions to cut cost and adjust networks to freight demand, but companywide capital spending for fiscal 2013 would remain at $3.9 billon.
Although the parcel giant’s revenue rose 3 percent year-over-year to nearly $10.8 billion, FedEx said the growth in deferred services “outpaced our near-term ability to reduce” the operating cost of the express business. FedEx’s operating income rose 1 percent to $742 million in the same period, while its operating margin fell 6.9 percent from 7 percent.
FedEx Express business grew 1 percent year-over-year to $6.6 billion, as the operating margin shrank to 3.3 percent from 4.4 percent. U.S. domestic average daily package volume declined 5 percent, while international export volume ticked up 1 percent. Higher pricing of U.S. domestic shipments was partially offset by lower fuel surcharges, keeping domestic revenue per package growth at 2 percent.
Unfavorable exchange rates changes and lower fuel surcharges pulled international export revenue per package down 4 percent year-over-year. International priority freight volume rose 2 percent, but revenue per pound declined 4 percent on unfavorable exchange rate exchanges and lower fuel surcharges.
FedEx Ground revenue increased 8 percent to nearly $2.5 billion, as the operating margin rose 18.1 percent from 17.9 percent on a year-over-year basis. Growth in business-to-business and FedEx Home Delivery services pushed up FedEx Ground volume 5 percent. Increased rates drove revenue per package up 2 percent.
Although FedEx Smart Post saw volume jump 18 percent on e-commerce sales, revenue per package slipped 1 percent largely because of higher postal rates. FedEx Freight saw revenue rise 5 percent to $1.4 billion, as less-than-truckload shipments rose 4 percent.
Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @Szakonyi_JOC.
