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FedEx Reports Earnings in Line With Expectations

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Despite rising fuel costs, FedEx reported second-quarter earnings per share of 67 cents, in line with the consensus of 15 analysts polled by

First Call/Thomson Financial


The Memphis, Tenn.-based express delivery service also forecasted results for the remainder of the fiscal year that were above analysts' estimates except for the third quarter, which were slightly below expectations.

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For the second quarter that ended Nov. 30, FedEx reported revenue of $4.9 billion, a 7% rise over the $4.6 billion recorded in the year-ago quarter. Operating income of $345 million and net income of $194 million represented 13% increases over the year-ago numbers.

Fuel expenses were $78 million higher than in last year's second quarter, including the benefits of hedging. These costs were offset by strong growth in volume and yield in the company's domestic and international delivery services. The company's fastest-growing segment, as forecast, was international priority shipping, which showed an 11% increase in volume. Average daily volume for FedEx's new home delivery service doubled from the end of the first quarter to the end of the second, the company said.

For the third quarter, FedEx said it expects earnings per share between 35 cents and 40 cents, versus the analysts' consensus estimate of 41 cents. For the fourth quarter, the company foresees earnings of 90 cents to $1 per share, higher than the 89 cents forecast by analysts. For the full year, FedEx expects earnings of $2.65 per share, well above the $2.54 foreseen by analysts. But FedEx cautioned that its outlook "depends on a soft landing for the economy."