Fedex reports 1st Quarter profit

FedEx Corp. reported a net profit of $464 million for its fiscal first quarter ended Aug. 31, up 22% from net income of $380 million in the prior-year period. Despite the profit rise, the Memphis-based express delivery carrier lowered per share earnings guidance for its full fiscal year ended May 31 from $6.35-$6.85 to $6.25-$6.75, reflecting slower-than-expected global economic growth.

"The US and global economy grew at a slower rate than we anticipated during the quarter," executive VP and CFO Alan Graf said. He added that a "rapid decline in demand" for its air-reliant FedEx Express unit, "particularly from Asia," led to the earnings downgrade. Also, the company said FedEx Express shipping rates would rise by a net average of 3.9% for US domestic, US export and US import services, effective Jan. 2, 2012.

FedEx's companywide revenue grew 11% year-over-year in the fiscal first quarter to $10.52 billion while expenses increased 11% to $9.78 billion, producing an operating profit of $737 million, up 17% from $628 million in the year-ago period. FedEx Express saw its operating income dip 19% year-over-year to $288 million as revenueincreased 12% to $6.59 billion but expenses jumped 13% to $6.3 billion. The unit's fuel costs leaped 43% to $1.08 billion.

FedEx Express "operating income and margin [4.4% compared to 6% in the August 2010 quarter] decreased as package volume declines accelerated during the quarter due to slowing global economic growth," the company said. "The package volume declines were more pronounced in certain premium services."

(Aaron Karp - ATWOnline News)