FedEx second quarter earnings down
FedEx reported revenue of $11.1 billion for its second quarter ended Nov. 30, up 5 percent from $10.6 billion for the same period a year ago. Net income was $438 million, down 12 percent from last year’s $497 million. The company says Hurricane Sandy impacted the quarter’s results due to reduced shipment volumes and incremental operating costs.
“Operating income for the quarter improved at FedEx Freight and FedEx Ground due to increased volumes and higher yields, while persistent weakness in the global economy and increased demand for lower-yielding international services limited profits at FedEx Express,” said Frederick W. Smith, FedEx Corp. chairman, president and CEO. “Earnings also were negatively impacted by disruptions caused by superstorm Sandy. We are hard at work on another record-setting holiday shipping season, driven by the continued growth of e-commerce.”
FedEx also reported these results for the second quarter:
• Operating income of $718 million, down 8% from $780 million last year
• Operating margin of 6.5%, down from 7.4% the previous year
The company’s FedEx Express segment reported revenue of $6.86 billion, up 4 percent from last year’s $6.58 billion. Operating income was $230 million, down 33 percent from $342 million a year ago. The company said operating income and margin were lower due to the demand shift toward lower-yielding international services, the negative year-over-year impact of net fuel changes, increased depreciation expense, the effects of Sandy and higher pension costs.
FedEx Express has entered into an agreement to purchase four additional 767-300 freighters as part of the company’s continued fleet modernization efforts. This brings the total 767-300 orders to 50, with deliveries beginning in fiscal 2014. In concert with this commitment, two 777 freighter deliveries were deferred from fiscal 2015 to fiscal 2016 in order to better match capacity timing to global demand.