Though revenues for the carrier's first fiscal quarter were up 8% year over year to $9.97 billion, its net income was down 22% to $384 million from last year's $494 million.
“Global economic conditions are challenging,” said Frederick W. Smith, the company's chairman, president and CEO. “But FedEx is taking strong, proactive actions to manage through this difficult cycle. We are committed to implementing strategies that will enhance the customer experience, gain market share, reduce expenses, improve profits and ensure the long-term success of the company.”
For stockholders earnings were $1.23 per diluted share for the first quarter ended August 31, compared to $1.58 per diluted share a year ago. The company's operating income for the quarter was $630 million which is down by 8.8% from 2007. Operating margin last year was 8.8%. This year the operating margin was 6.3%.
The company points to global economic weakness, higher fuel prices and what it calls the “related negative effects of higher fuel surcharges” as factors influencing the quarter's outcome. It notes, as well that although late in the quarter fuel prices declined from their historic highs, the average price of jet fuel was up 77% over last year.
Effective January 5, 2009 FedEx Express will increase its shipping rates by an average of 6.9% for both US and US export services. The increase will be slightly moderated by an adjustment in the fuel price at which fuel surcharges begin. The company anticipates this will reduce the fuel surcharge by 2%. FedEx Ground increases in rates and surcharges will be announced later this year.
Segment by segment, here are first quarter results compared with 2007 figures:
FedEx Express. Revenues of $6.42 billion were up 9%. Operating income was $345 million, down 34%. The operating margin was 5.4%. Within the segment, its International Priority package revenue was up 12% as a result of 14% growth in revenue per package that came from higher fuel surcharges and favorable exchange rates.
FedEx Freight. Its revenues of $1.35 billion were up 10%. Operating income was $89 million, down 10%. Its operating margin at 6.6% was down 8.5%. Within the segment, less-than-truckload average daily shipments were up 4% and yielded a 5% increase due to higher fuel surcharges.
FedEx Services. Down 2%. The segment includes FedEx Office and FedEx Global supply Chain Services.