FedEx has reported results for the third quarter of its financial year showing a growth in revenue of 9% to $8.00 billion up from $7.34 billion the previous year. It achieved operating income of $713 million, up 29% from $552 million, resulting in an operating margin of 8.9%.

Total combined average daily package volume at FedEx Ground and FedEx Express grew 4% year on year for the quarter, led by improved ground and international express package growth. According to the company, yield management remains a top priority across all transportation services although this resulted in lower U.S. deferred express volumes.

FedEx?s Express Segment saw revenue rise by 9% to $5.34 billion, whilst operating income soared by 31% to $446 million. This resulted in margins jumping to 8.4% from 6.9% in the same quarter last year as performance benefited from solid growth in FedEx International Priority (IP) and U.S. Overnight.

FedEx IP revenue grew 12% for the quarter. IP average daily package volume grew 10%, due to strong growth in Asia and Europe and continuing growth in U.S. export. IP revenue per package grew 2% due to higher fuel surcharges and improved regional mix, partially offset by currency exchange rate impacts. U.S. domestic revenue per package increased 8%, while U.S. domestic volume was down 3% resulting from yield management actions.

Management commented that earnings for its third quarter were better than forecasted due to a stronger than expected holiday peak season for FedEx Ground, improved productivity in its transportation segments, lower than expected fuel costs, deferral of advertising and promotion costs to the fourth quarter and a lower effective tax rate. However earnings guidance for the fourth quarter, which assumes continued economic growth, reflects a more normal expense trend.

Source: Transport Intelligence

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