Business World

Wednesday 17 September 2014

FedEx's ground business boosts fourth-quarter revenue

Published 18/06/2014 | 14:46

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FedEx Corp (FDX.N) reported a better-than-expected quarterly profit as strong shipments of items ordered online boosted the world No. 2 package delivery company's ground business.

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FedEx, whose shares were up 4 percent in premarket trade on Wednesday, also said earnings for 2015 should benefit from ongoing cost cutting and restructuring.

The company, like larger rival United Parcel Service Inc (UPS.N), has been cutting costs to offset rising fuel prices and is restructuring its Express business, which makes deliveries at a guaranteed day and time.

FedEx said last month it would start charging by parcel size, instead of weight alone, to reduce costs. UPS followed suit with a similar announcement on Tuesday.

FedEx got a boost in its latest quarter from an 8 percent increase in average ground shipment volumes as more people shop online rather than visiting stores.

U.S. online retail sales are expected to double to $508 billion by 2020 from about $260 billion in 2013, according to FTI Consulting Inc (FTI.N).

Total revenue for the fourth quarter ended May 31 rose to $11.8 billion from $11.4 billion. Analysts had expected $11.66 billion, according to Thomson Reuters I/B/E/S.

The company reported earnings of $2.46 per share, well above the average analyst estimate of $2.36 per share.

For 2015, FedEx said it expects earnings of $8.50 to $9.00 per share. Analysts were expecting earnings of $8.76 per share.

FedEx shares were trading at $145.10 before the bell. UPS's (UPS.N) shares were up 1.3 percent at $102.97.

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