FedEx Earnings Double in Q1

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FedEx Corp.'s first-quarter earnings more than doubled, pushed by an expansion of international express deliveries and ground shipping, the Memphis, TN, company said yesterday.

FedEx earned $330 million for the three months ended Aug. 31, up from $128 million the same time a year ago. Revenue was $6.98 billion, up 23 percent from $5.69 billion, and operating income was $579 million, up from $200 million.

Total average daily package volume at FedEx Express and FedEx Ground grew a combined 6 percent year over year for the quarter due to continued strong growth in international express shipments and higher growth in ground shipments. FedEx Freight average daily less-than-truckload shipment volume increased 14 percent. Revenue per package increased at FedEx Express and FedEx Ground, while LTL revenue per hundredweight grew at FedEx Freight.

"Our strong earnings performance reflects an increased demand for our broad portfolio of services, successful execution of our cross-selling strategy and the expanding global economy," said Frederick W. Smith, chairman, president and CEO. "Customers are increasingly seeing the value of using FedEx to reach new markets, grow their businesses and cut inventory-carrying costs."

First-quarter revenue included $490 million from FedEx Kinko's, which was acquired in late fiscal 2004.

FedEx expects second-quarter earnings to be $1.10 to $1.20 per diluted share, while earnings for the year are still expected to be $4.40 to $4.60 per diluted share.

Capital spending for fiscal 2005 is forecast around $2.1 billion. Growth in FedEx International Priority services requires additional aircraft capacity and infrastructure for FedEx Express. Growth at FedEx Freight and FedEx Ground is also driving further investments in those networks.

"We continue to be highly focused on increasing profitability and improving returns and cash flow," said Alan B. Graf Jr., executive vice president and chief financial officer. "The increased investment in our networks is expected to give us the necessary capacity to handle anticipated growth in the future. We expect cash flows from operating activities to exceed capital spending even with these additional capital investments."

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