FedEx Q2 Income Unchanged Despite Higher Revenue

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FedEx Corp.'s net income of $245 million for the second quarter that ended Nov. 30 was unchanged from last year despite a 10 percent rise in revenue to $5.67 billion, the company said yesterday.

Much of the shortfall came in the company's flagship FedEx Express, which had a 26 percent decline in operating income to $228 million. Quarterly revenue at the express unit was $4.1 billion, or 7 percent more than last year's Q2, which included the shutdown of U.S. air transport for several days after the Sept. 11 attacks.

FedEx attributed the decline in operating income to higher costs for benefits, maintenance and fuel and a slight decline in U.S. volumes. In addition, last year included a $17 million lift from a tax settlement.

International Priority volume grew 13 percent in the second quarter, led by exports from Asia, where volume rose 27 percent year over year. FedEx also said its venture with the U.S. Postal Service is bearing fruit.

FedEx Ground reported revenue of $863 million, up 27 percent from last year's $677 million, and operating income of $135 million, up 69 percent from $80 million a year ago. Average daily package volume grew 25 percent in the second quarter, with about one-third of that coming from FedEx Home Delivery.

FedEx also said it anticipates reducing capital spending in 2003 to $1.7 billion, down $200,000 from its previous forecast.

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