Winter Slows FedEx Profit Growth, LTL Business Jumps
March 19, 2014
Photo: Evan Lockridge
FedEx on Wednesday reported gains in both revenue and profit during its fiscal third quarter ending Feb. 28.
Revenue was $11.3 billion, up 3% from $11 billion the same time a year ago, while net income totaled $378 million, up 5% from last year’s $361 million or $1.23 per share compared to $1.13 per share.
Unusually severe winter storms throughout the quarter disrupted operations, decreasing shipping volume and increasing costs, and impacted year-over-year operating income by an estimated $125 million, according to the company. Also the results were impacted by business realignment costs totaling $47 million, primarily related to the company’s voluntary buyout program for eligible U.S. officers and managing directors.
FedEx projects earnings to be $2.25 to $2.50 per share in the fourth quarter and $6.55 to $6.80 per share for fiscal 2014, down from an earlier estimate.
For the third quarter, the FedEx Freight segment reported revenue of $1.35 billion, up 9% from last year’s $1.24 billion, operating income of $29 million, up from $4 million a year ago, and an operating margin of 2.2%, up from 0.3% the previous year.
Less-than-truckload average daily shipments and weight per shipment increased 7% and 2%, respectively. LTL revenue per hundredweight decreased 2% primarily due to changes in shipment characteristics and lower fuel surcharges.
Operating income improved as the positive impacts of higher shipment volumes, heavier average weight per shipment, greater utilization of rail in the economy service offering and one additional business day were partially offset by the impact of weather, according to FedEx.
The FedEx Express segment reported revenue of $6.67 billion, down slightly from last year’s $6.7 billion with operating income of $135 million, up 14% from $118 million a year ago.
For the third quarter, the FedEx Ground segment reported revenue of $3.03 billion, up 10% from last year’s $2.75 billion, with operating income of $477 million, up 2% from $467 million a year ago.
More details are on the FedEx website.