FedEx profit up on costs cuts, trucking

FedEx profit up on costs cuts, trucking

FedEx Corp. on Wednesday reported a better-than-expected increase in quarterly earnings, helped by cost savings and jumps in overseas and trucking shipments.

The Memphis-based logistics provider said fiscal third-quarter net income, including costs from staff reductions, was $207 million.

In the year-earlier quarter, when FedEx struggled against severe North American winter storms, the company had net income of $147 million.

Excluding the costs, profit for the quarter ended Feb. 29 would have been $216 million, FedEx said in a news release.

Revenue at FedEx, which acquired the Kinko's copy center chain during the quarter, rose to $6.06 billion, from $5.55 billion a year earlier. Kinko's added about $100 million in revenue, the company said.

The cost-cutting program saved the company about $65 million in the third quarter and helped lift operating income 77 percent at the company's signature, but slowly growing express unit, FedEx said. Express operating income was $230 million, up $100 million from a year earlier. Revenue at Express rose to $4.37 billion from $4.09 billion.

Express's operating margin shot up to 5.3 percent from 3.2 percent, aided by a 21 percent increase in international priority revenue as average weight per package increased and it benefited from the weak dollar.

Worldwide express volumes were up 1 percent, and U.S. domestic express volumes were flat.

Operating income at FedEx Ground, the package service that competes directly against United Parcel Service, rose 3 percent to $112 million on an 8 percent rise in revenue. The unit's operating margin declined to 11.6 percent from 12.3 percent.

At FedEx Freight, the company's shared-loads trucker, revenue rose 11 percent and operating income shot up 32 percent to $37 million from $28 million.

FedEx said it expected fiscal fourth-quarter share earnings to be $1.15 to $1.25, excluding the costs of the company's staff-reduction costs. That would be up sharply from the 92 cents a share reported a year earlier.