FedEx Tops Estimates, Backs 2015 Outlook; Hikes Shipping Rates

(RTTNews) - Package delivery giant FedEx Corp. (FDX) reported Wednesday profit for the first quarter that grew 24 percent from last year, reflecting improved operating margins and revenue growth. Both earnings per share and quarterly revenues topped analysts' expectations.

FedEx noted that its results were driven by higher volumes and increased yields across all three transportation segments. FedEx also maintained its earnings guidance for the full-year 2015, and announced an increase in shipping rates across the board.

The performance of package shipping bellwethers like FedEx and its rival United Parcel Service, Inc. (UPS) are generally considered a strong barometer of overall consumer attitude and business confidence due to the large number of shipments they handle for consumers worldwide.

"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. More customers are relying on FedEx because they appreciate the competitive advantages provided by our broad portfolio of solutions," Chairman, President and CEO Frederick Smith said in a statement.

The Memphis, Tennessee-based FedEx, a Dow component, reported net income of $606 million or $2.10 per share for the first quarter, higher than $489 million or $1.53 per share in the prior-year quarter.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $1.96 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter increased 6 percent to $11.68 billion from $11.02 billion in the same quarter last year, and topped seventeen Wall Street analysts' consensus estimate of $11.48 billion.

Revenues for FedEx express grew 4 percent to $6.86 billion, and FedEx ground revenues increased 8 percent to $2.96 billion from last year. Revenues for FedEx freight improved 13 percent to $1.61 billion, while FedEx services revenues edged down $1 to $374 million from last year.

Operating margins for the quarter improved 130 basis points to to 8.5 percent from last year's 7.2 percent.

Effective January 5, 2015, FedEx Express will increase shipping rates by an average of 4.9 percent for U.S. domestic, U.S. export and U.S. import services. FedEx Ground, FedEx Freight and FedEx Home Delivery will also hike shipping rates by an average of 4.9 percent. FedEx SmartPost rates will also change.

Looking ahead to fiscal 2015, the company continues to project earnings in a range of $8.50 to $9.00 per share. Street is currently looking for full-year 2015 earnings of $8.84 per share. The capital spending forecast for fiscal 2015 is also maintained at $4.2 billion.

"FedEx reported strong first quarter results, as all three of our transportation segments drove higher revenues and improved profitability year over year. Our profit improvement programs are progressing as planned and we continue to expect strong earnings growth this year," CFO Alan Graf, Jr. stated.

FDX closed Tuesday's regular trading session at $154.66, down $0.15 on a volume of 2.22 million shares. In the past 52-week period, the stock has been trading in a range of $111.25 to $155.31.