FedEx Corp. on Tuesday reported increased net earnings in its most recent quarter, but it missed Wall Street expectations.
The parcel and trucking company said revenue in its fiscal third quarter was unchanged from a year ago at $15 billion while net income increased to $562 million, or $2.07 per share, compared to $507 million, or $1.84 per share, a year earlier. While revenue met a consensus estimate from analysts, expected per share net income was greater at $2.62.
Adjusted earnings, which include one-time items such as TNT Express integration expenses, fell to $638 million, or $2.35 per share, down from a year ago when they came in at $692 million, or $2.51 per share, respectively
“Our worldwide FedEx team delivered an outstanding peak season. Even with our highest volumes ever, we achieved record service levels,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “We are confident our strategic investments to expand our global scope and portfolio of solutions position FedEx for greater long-term profitable growth as we adapt to meet the evolving needs of our customers.”
Operating results were impacted by the significantly negative net impact of fuel and one fewer operating day at FedEx Express and FedEx Ground, and network expansion at FedEx Ground, according to the company. These factors were partially offset by the benefits from yield growth at all of the company’s transportation segments.
The company’s FedEx Express segment saw revenue increase to $6.78 billion in the most recent quarter compared to $6.56 billion a year earlier while operating income fell to $555 million from $595 million.
“Revenue increased 3% as higher base rates and package volume were partially offset by the negative impact from one fewer operating day,” FedEx said. “Operating income declined due to the significantly negative net impact of fuel and one fewer operating day.”
FedEx Freight saw its revenue in the quarter increase 3% from a year earlier to $1.49 billion, but operating income declined 27% to $41 million.
Revenue increased due to higher base rates and fuel surcharges. Average daily shipments were flat as the company focuses on revenue quality in a continued weak U.S. industrial environment, FedEx said. “Operating results decreased due to the impact from higher salaries and wages and increased information technology expenses.”
FedEx Ground saw revenue increase by 6%, but operating income fell 8% while revenue for TNT Express was unchanged and operating income fell 95% due to integration expenses.
FedEx said it was unable to offer full earnings guidance for its 2017 fiscal year due to pension counting adjustments, but noted before them earnings are projected to be between $10.80 and $11.30 per share.
Originally posted on Automotive Fleet
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