MEMPHIS, Tenn. – Shipping company FedEx Corp. (FDX) on Wednesday said second-quarter profit jumped 33 percent to easily beat its own and Wall Street's expectations, as demand for its services grew and the company pushed back advertising costs.
Net income increased to $471 million, or $1.53 per share, from $354 million, or $1.15 per share, in the same quarter last year. Revenue grew 10 percent to $8.09 billion from $7.33 billion in the year-ago period.
Analysts polled by Thomson Financial expected earnings of $1.40 per share on sales of $8.07 billion. The company had forecast quarterly profit between $1.30 and $1.45 per share.
"Customer demand for our broad portfolio of transportation services, a disciplined pricing approach by FedEx and strong productivity gains led to a sharp improvement in our operating margins," said Frederick W. Smith, chairman, president and chief executive.
Smith added that the company is also benefiting from solid economic growth in the U.S. and Asian economies — a trend he sees continuing into 2006.
Total average daily package volume at FedEx Express and FedEx Ground businesses rose 3 percent year-over-year, driven by international express package growth. Ground volumes got off to a slow start but strengthened toward the quarter's end in November.
Looking ahead, Memphis-based FedEx forecast third-quarter profit between $1.15 and $1.30 per share, within range of analysts' consensus estimate of $1.23 per share. The company also raised its full-year earnings outlook to a range of $5.45 to $5.70 per share from an earlier estimate of $5.25 to $5.50 per share, which includes a lease accounting charge of 15 cents per share. Analysts are looking for per-share profit of $5.55 for the fiscal year ended in May.
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