FedEx Has a Big Revenue Boost

Sept. 27, 2006
This years operating income of $784 million climbed 34% over last year's. The FedEx operating margin was 9.2% this year compared to last years 7.6%, and

This year’s operating income of $784 million climbed 34% over last year's. The FedEx operating margin was 9.2% this year compared to last year’s 7.6%, and the corporation’s net income for the quarter was up 40% year over year, to $475 million. The only business segment showing a decline was FedEx Kinko. The combined daily package volume for FedEx Express and FedEx Ground climbed 5% year over year, with growth shown in ground and international express shipments.

Reasons given for the decline in FedEx Kinko revenues -- down 3% year over year to $504 million – was reduced demand for copy products and a highly competitive pricing environment for copy services. The segment is embarking on an expansion plan that will extend over several years. It opened 31 new locations in the first quarter with plans to open a total of 200 new locations during the fiscal year.

While FedEx Freight increased its operating income by 14% year over year to $1.01 billion, its operating margin of 14.8% was down from last year’s 15.1%. Average daily less than truckload (LTL) shipments were up 8% for the quarter. The segment added heavy weight LTL capacity with the purchase of Watkins Motor Lines and Watkins Canada Express in early September.

With continued growth in FedEx Home Delivery operations and an average daily package volume that grew 13% in the quarter, the FedEx Ground segment increased revenues by 16% to $1.42 billion. While its operating income of $157 million was up 6% year over year, it’s operating margin was 11.1%, which was a decrease from the last year’s 12.1%.

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