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FedEx Corp. Reports Second Quarter Earnings

FedEx Express has entered into an agreement to purchase four additional 767-300 freighters as part of the company’s continued fleet modernization efforts. This brings the total 767-300 orders to 50, with deliveries beginning in fiscal 2014. In concert with this commitment, two 777 freighter deliveries were deferred from fiscal 2015 to fiscal 2016 in order to better match capacity timing to global demand.

FedEx Ground Segment

For the second quarter, the FedEx Ground segment reported:

• Revenue of $2.59 billion, up 11% from last year’s $2.34 billion

• Operating income of $412 million, up 4% from $398 million a year ago

• Operating margin of 15.9%, down from 17.0% the previous year

FedEx Ground average daily volume grew 8% in the second quarter driven by increases in both FedEx Home Delivery and business-to-business services. Revenue per package increased 2% due to increased rates and higher extra service revenue. FedEx SmartPost average daily volume increased 17% primarily due to growth in e-commerce. FedEx SmartPost net revenue per package increased 2% due to a change in service mix and to rate increases, partially offset by higher postage rates.

Operating income increased due to higher volume and revenue per package, partially offset by higher contractor rates, increased network expansion costs and the effects of Superstorm Sandy. Operating margin decreased primarily due to lower fuel surcharges paired with higher purchased transportation expenses related to increased fuel costs.

FedEx Freight Segment

For the second quarter, the FedEx Freight segment reported:

• Revenue of $1.38 billion, up 4% from last year’s $1.33 billion

• Operating income of $76 million, up 90% from $40 million a year ago

• Operating margin of 5.5%, up from 3.0% the previous year

Less-than-truckload (LTL) yield increased 2% due to FedEx Freight Economy base yield improvement. LTL average daily shipments increased 2% due to higher customer demand for the FedEx Freight Economy service offering in all lengths of haul.

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