FedEx reported its net profit in the first quarter of fiscal year 2014, ending Aug. 31, 2013, was $489 million, increasing 7 percent year-over-year from $459 million.
“Growth in overall demand for our broad global portfolio of solutions drove our improved first quarter results,” said Frederick W. Smith, FedEx chairman, president and CEO, in a written statement.
Quarterly revenue was $11.0 billion, up 2 percent from $10.8 billion in the same quarter last year. Although the FedEx Express segment’s revenue slid to $6.61 billion in the first quarter, down from $6.63 billion in the first quarter of the previous year, the FedEx Ground division’s revenue rose 11 percent to $2.73 billion and FedEx Freight’s revenue improved 2 percent to $1.42 billion.
“FedEx Express remains focused on reducing costs, while facing challenging global economic conditions,” Smith explained. “Meanwhile, FedEx Ground continues to generate strong profitability on growing customer demand for its services.”
FedEx’s express business has suffered recently as clients chose slower but cheaper delivery options, Reuters reported. To combat that, the company has revamped its routes, cutting capacity to Asia and other international markets.
Nevertheless, the company reaffirmed its forecast of full-year earnings per share growth of 7 percent to 13 percent from last year’s adjusted results.
Alan B. Graf Jr., FedEx executive vice president and CFO, commented: “We remain confident in our full-year earnings outlook despite tepid global economic growth. FedEx Express continued to execute on its profit improvement initiatives during our first quarter. We remain focused and are committed to FedEx Express achieving its $1.6 billion operating profit improvement target by the end of fiscal 2016.”
FedEx Express will increase shipping rates by an average of 3.9 percent for U.S. domestic, export and import services, effective Jan. 6, 2014. Furthermore, 2014 pricing changes for FedEx Ground and FedEx SmartPost will be announced later this year, according to the company. FedEx Freight implemented a 4.5 percent general rate increase on July 1, 2013.
Separately, FedEx Trade Networks, the freight forwarding arm of FedEx, has launched its FedEx International Direct Priority Ocean service in India. The product is now available from four India origins, including Bangalore, Chennai, Delhi and Mumbai. With FedEx International Direct Priority Ocean, cargo is shipped from the origin to North America, with final delivery available throughout the contiguous U.S.
“This launch makes us the only company offering this type of service between India and the United States, and is an integral part of our growth strategy to provide customers around the globe access to premier FedEx freight forwarding services,” said Christian Blain, FedEx Trade Networks’ vice president of Europe, the Middle East, India and Africa, in a written statement.
The company also announced the opening of freight forwarding operations in Bangalore, which marks the fourth FedEx Trade Networks office in India.