Express segment fuels FedEx profit surge

FedEx Corp. reported a $239 million net profit in its fiscal third quarter ended Feb. 28, more than double the $97 million posted in the year-ago period, driven by significant improvement at its FedEx Express segment.

"Outstanding execution of our business strategy and an improving global economy drove solid financial performance," Chairman, President and CEO Frederick Smith said. Group revenue was up 7% to $8.7 billion and operating income soared to $416 million from $182 million in the quarter ended Feb. 28, 2009.

"Revenue and earnings increased as a result of higher shipment growth, particularly in international express and at FedEx Ground. Strict cost controls also benefited results," the company said.

Express revenue rose 8% to $5.44 billion and operating income surged to $265 million from $45 million in the year-ago quarter. International Priority daily package volume was up 18%, fueled by exports from Asia, and IP revenue climbed 49%. On the US domestic front, average daily volume inched up 1% and revenue per piece "declined slightly," FedEx said.

"In the fourth quarter, we expect to grow our revenue and earnings through increased demand," Executive VP and CFO Alan Graf Jr. said. "With our improved performance and outlook, we are reinstating various employee compensation programs, which will dampen earnings growth in the fourth quarter and fiscal year 2011. We are also continuing to invest in long-term projects that improve service and reduce operating costs, such as long-range, fuel-efficient 777 freighters." The company is scheduled to take delivery of 30 777Fs this decade.