The overnight package company said it earned $500 million, or $1.57 a share, in the fiscal second quarter. Analysts surveyed by Thomson Reuters had estimated $1.64. Revenue rose 3% to $11.4 billion, in line with estimates.
During the same quarter a year earlier, FedEx earned $438 million, or $1.39 a share, after a one-time charge of 11 cents due to the impact of Hurricane Sandy.
"FedEx posted solid second-quarter earnings, reflecting improved performance at FedEx Express, as the profit improvement plan introduced more than a year ago continues to gain momentum," said CEO Fred Smith, in a prepared statement.
In premarket trading Wednesday, shares were falling $4.01 to $135.
The company said gains primarily reflected yield and management improvement at FedEx Express and lower pension costs. During the quarter, operating income at FedEx rose 15% to $827 million. At FedEx Express, revenue was flat at $6.84 billion, but operating income rose 42% to $326 million. At FedEx Ground, revenue rose 10% to $2.85 billion, while operating income rose 3% to $424 million.
Looking ahead, the company said full-year earnings would increase between 8% and 14%, an increase in its previous growth range, which was between 7% and 13%. The outlook includes the impact of share repurchases to date, but not of potential additional share repurchases.
"We remain on track to deliver a solid increase in earnings this fiscal year," said CFO Alan Graf. "FedEx Express reported significant year-over-year improvement in earnings during the quarter, aided by continued execution of our profit improvement programs and by ongoing cost reduction initiatives. We continue to look for additional ways to improve efficiencies and remain committed to increasing long-term shareowner value."
The capital spending forecast for fiscal 2014 remains $4 billion.
Written by Ted Reed in Charlotte, N.C.
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