Dallas - FedEx Corp. reported first-quarter profit that beat analysts’ estimates, bolstered by demand for ground shipping and lower maintenance expenses for new planes at the world’s largest air-cargo fleet.
Net income in the quarter ended Aug. 31 rose 6.5 percent to $489 million, or $1.53 a share, from $459 million, or $1.45, a year earlier, the Memphis, Tennessee-based company said today in a statement.
Analysts projected $1.50 a share, the average of 28 estimates compiled by Bloomberg.
The results underscore customers’ shift toward cheaper ground deliveries, where sales and package volumes both rose 11 percent.
FedEx began taking steps last year to adjust to the move away from air shipments, including retiring older jets, paring capacity to Asia and eliminating 3,600 jobs through buyouts as part of a $1.7 billion cost-cutting plan.
“You can understand why customers are trading down,” chief financial officer Alan Graf said today on a conference call.
“They get significantly better pricing and lose just a couple of days.”
FedEx rose 2.8 percent to $113.80 at 9:19 a.m. in New York.
The shares have advanced 21 percent this year through yesterday, compared with a 20 percent gain for the Standard & Poor’s 500 Index.
Revenue from international priority shipments, the focus of the customer shift, fell 5.1 percent to $1.58 billion while volume fell less than 1 percent.
Total sales in the quarter climbed 1.9 percent to $11 billion.
The company today also reaffirmed its full-year earnings per share forecast of growth of as much as 13 percent.
Expenses for maintenance and repairs fell 11 percent in the quarter, helped by “continued modernisation of the company’s aircraft fleet,” according to the statement.
The FedEx Express unit will boost rates 3.9 percent, matching last year’s increase.
Pricing changes at FedEx Ground and FedEx Smart Post will be announced at a later time, the company said. - Bloomberg News