Express drives FedEx first quarter growth

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FedEx Boeing 777 Freighter

FedEx has seen its net income increase in the first fiscal quarter of 2016 to $692 million from $653 million because of improvements in the Express segment.

The first quarter result was the highest seen since the fourth quarter of the 2014 fiscal year, when profit was $730 million. Throughout the 2015 fiscal year, FedEx made a profit of $653 million in the first quarter, followed by $663 million and $628 million in the second and third periods. In the fourth quarter FedEx made a loss of $895 million.

FedEx chairman, chief executive officer (CEO) and president, Frederick Smith says: “FedEx is performing solidly given the weaker than expected economic conditions, especially in manufacturing and global trade.”

Smith continues: “Our profit improvement programme is on track and delivering impressive results, and I am very confident FedEx is well positioned to deliver value for shareowners, customers and team members in fiscal 2016 and beyond.”

Express operating income increased to $545 million, up from $377 million in the same period of last year helped by favourable currency exchange rates reducing international expenses.

Revenue increased to $12.3 billion in the first quarter of this year compared to $11.7 billion in the same period of fiscal 2015. The Express revenue fell by four per cent from $6.8 billion to $6.6 billion due to lower fuel surcharges and unfavourable exchange rates. FedEx’s Ground segment saw revenue increase by 29 per cent to $3.8 billion, helped by higher revenue per package. The Freight revenue remained the same at $1.6 billion due to weak industry demand.

In July, FedEx Express announced its intention to purchase an additional 50 Boeing 767-300 Freighters, to be delivered between 2018 and 2023, with the option for 50 more. FedEx has a total of 106 firm orders for 767Fs.

When announcing the deal, FedEx Express president and CEO, David Bronczek said: “Acquiring additional 767F aircraft is a continuation of our very successful air fleet modernisation programme and will enable us to reduce structural costs, improve our fuel efficiency and enhance the reliability of our global network.”

In April, FedEx announced its intention to purchase TNT Express for eight euros ($9) per share.