FedEx Corp. reported operating income of $987 million, up 24 per cent from $795 million last year, on revenues of $11.7 billion, up 6 per cent from $11.0 billion the previous year, for the first quarter of fiscal 2015, ended August 31, 2014. FedEx reported operating margins of 8.5 per cent, up from 7.2 per cent the previous year, primarily due to higher volumes and increased yields at all three transportation segments. Net income of $606 million was reported, up 24 per cent from last year’s $489 million. “FedEx Corp. is off to an outstanding start in fiscal 2015, thanks to very strong performance at FedEx Ground, solid volume and revenue increases at FedEx Freight and healthy growth in U.S. domestic volume at FedEx Express,” said Frederick W. Smith, FedEx Corp. Chairman, President and Chief Executive Officer. “More customers are relying on FedEx because they appreciate the competitive advantages provided by our broad portfolio of solutions.”
2015 Rate Increases
FedEx Express, FedEx Ground and FedEx Freight will increase shipping rates effective January 5, 2015. FedEx Express will increase shipping rates by an average of 4.9 per cent for U.S. domestic, U.S. export and U.S. import services. FedEx Ground and FedEx Home Delivery will increase shipping rates by an average of 4.9 per cent. In addition, as announced in May, FedEx Ground will also begin applying dimensional weight pricing to all shipments.
FedEx Freight will increase shipping rates by an average of 4.9 per cent. This rate change applies to eligible FedEx Freight shipments within the U.S. (including Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands), between the contiguous U.S. and Canada, within Canada, between the contiguous U.S. and Mexico, and within Mexico. Details of all changes to rates and surcharges are available at fedex.com/us/2015rates.
FedEx Express Segment
For the first quarter, the FedEx Express segment reported revenue of $6.86 billion, up 4 per cent from last year’s $6.61 billion, and operating income of $369 million, up 35 per cent from $273 million a year ago.
Revenue increased due to higher U.S. domestic package volume and international export package yields partially offset by lower freight revenue. U.S. domestic package volume grew 5 per cent, as 8 per cent growth in overnight and deferred box volume was partially offset by lower envelope volume. U.S. domestic yield increased 1 per cent from higher fuel surcharges, changes in service mix and increased rates. FedEx International Priority® volume grew 1 per cent, while FedEx International Economy® volume increased 3 per cent. International export revenue per package increased 3 per cent due to fuel surcharges, higher rates and weight per package.
Operating income and margin improved as higher U.S. domestic package volume, improved international export yield and benefits from profit improvement programs more than offset higher aircraft maintenance expense and lower freight revenues.
FedEx Ground Segment
For the first quarter, the FedEx Ground segment reported revenue of $2.96 billion, up 8 per cent from last year’s $2.73 billion, and operating income of $545 million, up 13 per cent from $483 million a year ago.
FedEx Ground average daily volume grew 6 per cent in the first quarter, primarily driven by growth in e-commerce. Revenue per package increased 3 per cent due to increased rates and higher residential and fuel surcharges. FedEx SmartPost average daily volume decreased 10 per cent due to the reduction in volume from a major customer. SmartPost revenue per package increased 10 per cent due to rate increases and improved customer mix, partially offset by higher postage rates.
Operating income increased due to higher revenue per package and volume, partially offset by increased network expansion costs.
FedEx Freight Segment
For the first quarter, the FedEx Freight segment reported revenue of $1.61 billion, up 13 per cent from last year’s $1.42 billion, and operating income of $168 million, up 70 per cent from $99 million a year ago.
Less-than-truckload (LTL) average daily shipments increased 11 per cent, including a 13 per cent increase in demand for Priority service. LTL revenue per shipment increased 3 per cent due to higher weight per shipment, increased fuel surcharge revenue and higher rates.
Operating results improved due to increased LTL revenue per shipment, higher average daily LTL shipments and solid cost management.