FedEx quarterly net profit down 12pc to US$438 million, revenue up 5pc

FEDEX has announced its second quarter results ending November 30, experiencing a 12 per cent shrinkage in net profit to US$438 million from the same period of last year's $497 million, drawn on five per cent increase in revenue to $11.1 billion.

The company said the decline of the quarter's net profit was due to the increasing operating costs and the adverse impact of Hurricane Sandy that decreased shipment volumes.

"Earnings also were negatively impacted by disruptions caused by Superstorm Sandy. We are hard at work on another record-setting holiday shipping season, driven by the continued growth of e-commerce," said FedEx chairman, president and CEO Frederick Smith.

Operating income of FedEx in the second quarter was also down eight per cent to $718 million from $780 million in the same period last year, resulting in a 1.1 percentage points decrease in operating margin to 6.5 per cent from 7.4 per cent the previous year.

The company's FedEx Express segment reported a four per cent year-on-year increase in revenue to $6.86 billion. Operating income was $230 million, down 33 per cent from $342 million in the same period last year. However, the express operating income and margin fell due to the demand shift towards lower-yielding international services, the negative year-on-year impact of net fuel changes, increased depreciation expense, the effects of the hurricane and higher pension costs.

FedEx Express has signed a deal to purchase four additional 767-300 freighters to upgrade its fleet, which brings the total 767-300 orders to 50, with deliveries starting in 2014. Meanwhile, the company said two 777 freighter deliveries were deferred from fiscal 2015 to fiscal 2016 "in order to better match capacity timing to global demand."

Said Mr Smith: "Operating income for the quarter improved at FedEx Freight and FedEx Ground due to increased volumes and higher yields, while persistent weakness in the global economy and increased demand for lower-yielding international services limited profits at FedEx Express."