Continued strong earnings and good performance seem to come easy to Memphis-based logistics and transportation giant FedEx, as the second fiscal quarter figures show. The results are making FedEx shareholders even happier and are impressing Wall Street analysts.
Net income and share earnings rise considerably
Although sometimes hard to decipher properly, we publish here what we received as fiscal second quarter results - or what some may term as 3rd quarter 2018 fiscal year results.
The fiscal second quarter net income was listed as being US$16.5 billion, which is a good nine percent up on the same period last year. This ensured that earnings per share came out at US$3.72, which surprised Wall Street experts who had indicated a maximum of US$3.11 per share. In their statement, FedEx noted that the quarterly consolidated earnings have been adjusted to exclude the estimated US$1.15 billion reduction in their net U.S. deferred tax liability which is due to a lower statutory rate as part of the Tax Cuts and Jobs Act.
Individual sector performances went well according to information released by the company.
FedEx Express, which also includes TNT Express results, showed a revenue of US$9.37 billion - an increase of 8.5%. However, operating income in this sector dropped by 16% to US$610 million due to higher fuel surcharges, currency exchange rates and higher base rates. Higher than expected TNT Express integration costs and adverse weather conditions also affected this sector. The quarterly package revenues went up by 8% to just over US$7.0 billion.
FedEx Freight, the company’s less-than-truckload segment (LTL) saw revenues go up by 14% (US$1.69 billion) as well as a 34% increase in operating income. FedEx Ground revenues showed an 11% increase to US$5.22 billion and the operating revenue in this sector was US$634 million, a rise of 23%.
Massive new investment in Memphis hub
On March 17, FedEx announced that they will invest a further US$1 billion in their main hub at Memphis International Airport. The investment is aimed at improving capacity and operational efficiency there. A new sorting facility will be put in place and there will be further updates with more modern systems over the complete infrastructure. A new bulk truck loading building will be erected as well as a separate area for the handling of oversized cargo. Construction is planned to start next year and all should be completed by 2025.
FedEx Chairman & CEO, Fred Smith, was very content with the results of the second fiscal quarter and commented on the Memphis expansion by stating that: “Modernization and expansion of the Memphis hub will ensure that we continue to provide outstanding service to our customers around the world and make this an even better place to work for the thousands of team members.”
FedEx already employs 11,000 staff in their Memphis hub and it is expected that this figure will rise once again when the new facilities are in place.
John Mc Donagh
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