FedEx Ground Segment

For the third quarter, the FedEx Ground segment reported:

• Revenue of $2.75 billion, up 11% from last year’s $2.48 billion

• Operating income of $467 million, up from $465 million a year ago

• Operating margin of 17.0%, down from 18.8% the previous year

FedEx Ground average daily volume grew 10% in the third quarter, as growth in both FedEx Home Delivery and business-to-business services was driven by market share gains. Revenue per package increased 1% due to increased rates and higher residential surcharges, partially offset by lower package weights and fuel surcharge. FedEx SmartPost average daily volume increased 26% primarily due to growth in e-commerce. FedEx SmartPost net revenue per package was down 1% due to higher postage rates, partially offset by rate increases.

Operating income increased slightly, while operating margin was lower, as the benefit of higher volume and revenue per package was mostly offset by higher purchased transportation, a favorable self-insurance adjustment in the prior year, higher network expansion costs, one fewer operating day and intercompany charges of $9 million associated with the business realignment program.

FedEx Freight Segment

For the third quarter, the FedEx Freight segment reported:

• Revenue of $1.24 billion, up from last year’s $1.23 billion

• Operating income of $4 million, compared with an operating loss of $1 million a year ago

• Operating margin of 0.3%, up from (0.1%) the previous year

Less-than-truckload (LTL) yield increased 2% due to FedEx Freight Economy base yield improvement. LTL average daily shipments increased 1% due to higher customer demand for the FedEx Freight Economy service offering in all lengths of haul.

Even though the quarter had two fewer operating days, operating income and margin increased due to higher yield, volume growth and continued operational efficiencies within the company’s integrated network.

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