Tennessee-based package delivery service FedEx Corp. reported adjusted earnings of US$692 million, or $2.51 per share, for the third quarter ended February 29, 2016, compared to a profit of $586 million, or $2.03, in the same fiscal third quarter a year ago.
This year’s quarterly consolidated earnings have been adjusted for expenses related to certain legal matters and the pending acquisition of TNT Express, said the company.
FedEx beat analysts’ earning expectations for the quarter, saying it managed to handle the surge of holiday packages.
“Our strong financial performance was driven by increasing demand for our broad portfolio of FedEx business solutions which helped increase revenue and adjusted profit for the corporation,” said Frederick W. Smith, FedEx Corp. chairman, president, and chief executive officer.
“We sincerely appreciate the peak season efforts of our FedEx team members who delivered great service despite the challenges of stronger-than-expected shipping demand, driven by the growth in e-commerce.”
Adjusted operating income rose 19% year-over-year primarily due to improved yield management and the continued positive impacts from profit improvement program initiatives at FedEx Express. The net impact of fuel and currency exchange rates also improved results.
These benefits were partially offset by weaker operating results at the freight and ground divisions.
On the outlook for fiscal year 2016, FedEx is tightening its adjusted earnings forecast to $10.70 to $10.90 per share compared to the previous forecast of $10.40 to $10.90 per diluted share.
The outlook assumes moderate economic growth and excludes certain legal matters as well as any TNT-related costs or operating results.
“We now expect our fiscal 2016 adjusted earnings to be up 20% to 22% over last year, as we continue to benefit from our execution of the profit improvement program,” said Alan B. Graf, Jr., group executive vice president and chief financial officer.
“Our positive financial momentum should continue into our upcoming fiscal 2017, where we expect solid growth in earnings and cash flow,” he added.
On the three business units’ individual performance in the third quarter, the express segment reported revenue of $6.56 billion, down 1% from last year’s $6.66 billion, and operating income of $595 million, up 51% from $393 million a year ago.
The ground segment, meanwhile, chalked up revenue of $4.41 billion, up 30% from last year’s $3.39 billion, while operating income registered at $557 million, down from $559 million a year ago.
The freight division in the third quarter had revenue of $1.45 billion, up 1% from last year’s $1.43 billion, and operating income of $56 million, down 16% from $67 million in the same period of the preceding year.
