FedEx Quarterly Profit Rises 26%

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FedEx Corp. said yesterday that earnings for the quarter ended Nov. 30 were up 26 percent to $245 million, helped by tax benefits and lower fuel costs.


Revenue in the quarter was $5.14 billion, up 5 percent from $4.9 billion a year earlier. Operating income was $433 million, a 26 percent increase from $345 million a year ago.


"Earnings exceeded our previous forecast primarily due to a state tax settlement at FedEx Express, lower net fuel expense, improved productivity at FedEx Ground and more pounds than anticipated from the U.S. Postal Service transportation agreement," said Alan B. Graf Jr., executive vice president and chief financial officer.


FedEx Ground volume growth rates improved in October and November, finishing the quarter up 11 percent from the previous year. In addition, revenue from FedEx Ground for the quarter was $677 million, up 16 percent from last year's $582 million, and operating income was $80 million, up 40 percent from $57 million a year ago.


FedEx Express did not fare as well. For the second quarter, revenue was $3.81 billion, down from last year's $3.9 billion. Operating income was $309 million, up 14 percent from $271 million a year ago.


FedEx, Memphis, TN, said the division experienced second-quarter volume losses related to the Sept. 11 attacks. Numbers also were down, the company said, because of softness in the high-tech and other durable-goods sectors. U.S. domestic express average daily package volume declined 10 percent year-over-year for the second quarter while package volume for the FedEx International Priority service was down 6 percent.


However, FedEx Express received $16.5 million from the resolution of a state tax matter in the quarter and $116 million from the Air Transportation Safety and System Stabilization Act, which assisted companies affected by Sept. 11.


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