Seven percent - that's the growth rate for several financial benchmarks in Wednesday's fiscal first quarter earnings report from FedEx Corp
The Memphis, Tenn.-based package delivery and freight transportation company said profit grew to $489 million and operating income reached $795 million, while operating margin edged up from 6.9 percent to 7.2 percent.
The increased revenue, up 2 percent to $11 billion, and earnings reflect growth in demand for FedEx's services, but were dampened by one less operating day this quarter and the negative impact associated with the timing of when fuel costs were booked relative to receipt of fuel surcharges, the company said.
FedEx Express experienced a 14 percent improvement in operating income to $236 million, primarily due to the reduction in pension expenses. U.S. domestic volume was flat, while international grew 4 percent.
The Ground segment pushed up operating income by 5 percent to $468 million, with operating income rising a point to 17.1 percent. Average daily volume grew 11 percent in the quarter due to continued growth in Home Delivery and commercial business services, while FedEx SmartPost's average daily volume increased 26 percent due to growth in e-commerce.
FedEx Freight's operating income grew 1 percent to $91 million, primarily due to higher weight per shipment and a slight bump in yield overcoming the impact of one fewer operating day, the company said.
FedEx also announced Express shipping rates will increase by an average of 3.9 percent, effective Jan. 6. FedEx Ground and SmartPost pricing changes for 2014 will be announced later this year. FedEx Freight implemented a 4.5 percent general rate increase on July 1.
- Eric Kulisch