FedEx profit up 35%
03-22-2006, 09:44 AM
#1
MD-11 first officer
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Joined APC: Jun 2005
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FedEx profit up 35%
FedEx profit jumps 35 percent
Wed Mar 22, 2006 10:24 AM ET
By Nick Zieminski
NEW YORK (Reuters) - FedEx Corp. <FDX.N>, the world's largest air-express carrier, on Wednesday posted a higher quarterly profit on a better-than-expected U.S. holiday season, strong global economic growth and price increases, and raised its full-year profit forecast.
The Memphis-based company, often perceived as a barometer for the U.S. economy because it ships a broad range of products from raw materials to finished goods, also said it benefited from lower-than-expected fuel costs during the quarter.
It also cited better productivity, a lower tax rate, and said it deferred advertising and promotion costs to its fourth quarter, which ends in May.
FedEx shares, which have gained 9 percent since the start of the year, were down 77 cents, to $112.45, in morning trading on the New York Stock Exchange.
"While the stock has been strong year-to-date and expectations were for a strong quarter, our sense is this was a very strong and clean quarter that shows evidence of increasing volume acceleration at Ground, improving margins at Express and stabilizing yields generally," Bear Stearns analysts Edward Wolfe said in a note to clients.
Net income rose to $428 million, or $1.38 a share, in the fiscal third quarter ended February 28, compared with $317 million, or $1.03 a share, in the year-earlier quarter.
Analysts had expected $1.30 per share, according to Reuters Estimates.
It was the second consecutive quarter that results came in well ahead of the company's own range.
Global economic growth is likely to continue for the near term, led by the United States and China, with Japan also contributing more, Chief Executive Fred Smith said on a conference call with analysts.
Sales rose 9 percent, to $8.0 billion, slightly below forecasts of $8.03 billion in revenue.
FedEx's Express segment, which usually makes up some two-thirds of its total revenue, saw sales increase 9 percent, to $5.34 billion, and operating margins jumped to 8.4 percent from 6.9 percent a year earlier. Its FedEx International Priority revenue rose 12 percent on fuel surcharges.
The company's international business, while smaller than its U.S. domestic business, benefits from higher margins. Results in recent years have been boosted by robust growth in its Asian business.
In January, FedEx bought out its Chinese joint-venture partner and has high hopes for that rapidly developing market. It said Wednesday it will add three weekly flights to China beginning this month.
Revenue rose 14 percent in FedEx's Ground segment, to $1.36 billion, and the division also reported higher margins, as did the Freight division, which posted a 14-percent sales increase to $848 million. It said fuel surcharges and higher rates boosted results.
Looking ahead, FedEx said it expected fourth-quarter profit in a range of $1.65 to $1.80 a share, compared with Wall Street consensus estimates of $1.73. The company estimated full-year profit will be between $5.66 and $5.81 per share, up from its earlier forecast of $5.45 to $5.70. That includes a 15 cent lease-accounting charge, the company said.
Excluding the charge, FedEx will earn $5.81 to $5.96, which is ahead of analyst forecasts of $5.79, according to Reuters Estimates.
FedEx shares trade for about 17 times next year's projected earnings, a slight discount to the price-to-earnings ratio of United Parcel Service Inc. <UPS.N>, which trades at a multiple of 18. FedEx also trades at a discount to the Dow Jones Transportation index <.DJT>, which has a multiple of about 18.
(Additional reporting by Nick Carey in Chicago)
Wed Mar 22, 2006 10:24 AM ET
By Nick Zieminski
NEW YORK (Reuters) - FedEx Corp. <FDX.N>, the world's largest air-express carrier, on Wednesday posted a higher quarterly profit on a better-than-expected U.S. holiday season, strong global economic growth and price increases, and raised its full-year profit forecast.
The Memphis-based company, often perceived as a barometer for the U.S. economy because it ships a broad range of products from raw materials to finished goods, also said it benefited from lower-than-expected fuel costs during the quarter.
It also cited better productivity, a lower tax rate, and said it deferred advertising and promotion costs to its fourth quarter, which ends in May.
FedEx shares, which have gained 9 percent since the start of the year, were down 77 cents, to $112.45, in morning trading on the New York Stock Exchange.
"While the stock has been strong year-to-date and expectations were for a strong quarter, our sense is this was a very strong and clean quarter that shows evidence of increasing volume acceleration at Ground, improving margins at Express and stabilizing yields generally," Bear Stearns analysts Edward Wolfe said in a note to clients.
Net income rose to $428 million, or $1.38 a share, in the fiscal third quarter ended February 28, compared with $317 million, or $1.03 a share, in the year-earlier quarter.
Analysts had expected $1.30 per share, according to Reuters Estimates.
It was the second consecutive quarter that results came in well ahead of the company's own range.
Global economic growth is likely to continue for the near term, led by the United States and China, with Japan also contributing more, Chief Executive Fred Smith said on a conference call with analysts.
Sales rose 9 percent, to $8.0 billion, slightly below forecasts of $8.03 billion in revenue.
FedEx's Express segment, which usually makes up some two-thirds of its total revenue, saw sales increase 9 percent, to $5.34 billion, and operating margins jumped to 8.4 percent from 6.9 percent a year earlier. Its FedEx International Priority revenue rose 12 percent on fuel surcharges.
The company's international business, while smaller than its U.S. domestic business, benefits from higher margins. Results in recent years have been boosted by robust growth in its Asian business.
In January, FedEx bought out its Chinese joint-venture partner and has high hopes for that rapidly developing market. It said Wednesday it will add three weekly flights to China beginning this month.
Revenue rose 14 percent in FedEx's Ground segment, to $1.36 billion, and the division also reported higher margins, as did the Freight division, which posted a 14-percent sales increase to $848 million. It said fuel surcharges and higher rates boosted results.
Looking ahead, FedEx said it expected fourth-quarter profit in a range of $1.65 to $1.80 a share, compared with Wall Street consensus estimates of $1.73. The company estimated full-year profit will be between $5.66 and $5.81 per share, up from its earlier forecast of $5.45 to $5.70. That includes a 15 cent lease-accounting charge, the company said.
Excluding the charge, FedEx will earn $5.81 to $5.96, which is ahead of analyst forecasts of $5.79, according to Reuters Estimates.
FedEx shares trade for about 17 times next year's projected earnings, a slight discount to the price-to-earnings ratio of United Parcel Service Inc. <UPS.N>, which trades at a multiple of 18. FedEx also trades at a discount to the Dow Jones Transportation index <.DJT>, which has a multiple of about 18.
(Additional reporting by Nick Carey in Chicago)
03-22-2006, 10:35 AM
#3
MD-11 first officer
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Joined APC: Jun 2005
Position: MD-11 slug
Posts: 201
Originally Posted by FR8Hauler
What can possibly be their excuse now for dragging this contract out?
Unless retro pay includes interest, the company will ALWAYS come out ahead by dragging out negotiations.
03-23-2006, 12:25 PM
#4
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Joined APC: May 2005
Position: -400 CAPT
Posts: 483
Sasquatch, you are right on the money. Extended out, dragged out contracts benefit the employer. Think of all the missed investment gains and company contributions that have yet to happen. And if another 9/11 happened??
This ain't no hobby...I want my money and contract improvements NOW.
This ain't no hobby...I want my money and contract improvements NOW.
03-23-2006, 12:37 PM
#5
Gets Weekends Off
Joined APC: Mar 2006
Posts: 1,409
Originally Posted by Sasquatch
Dragging it out has its advantages for Fred: Delta and Northwest taking additional concessions, waiting for UPS to settle, helps with great figures like today's, and forgone contributions to our B plan for starters. Not to mention if terrorists struck again.
Unless retro pay includes interest, the company will ALWAYS come out ahead by dragging out negotiations.
Unless retro pay includes interest, the company will ALWAYS come out ahead by dragging out negotiations.
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