FedEx saw revenues and profits increase by double-digit percentages during its fiscal first quarter as higher volumes, improved yields and lower fuel costs benefitted the company.
During the June-August period, the express giant recorded a revenue increase of 11% year on year to $17bn, while operating income improved by 10% to $1bn and net income was up 40% to $835m.
The company recorded higher volumes, increased yields and a favorable net impact of fuel at all of its segments.
The company also enjoyed a lower income tax rate as a result of the enactment of the Tax Cuts and Jobs Act, which lowered corporate tax from 35% to 21%.
Last year’s results were also negatively affected by the NotPetya cyberattack on TNT Express, costing around $300m, and Hurricane Harvey.
“FedEx delivered higher first-quarter earnings driven by solid execution of our business plan and a strong US economy,” said Fred Smith, FedEx chairman and chief executive.
“We are very optimistic about our prospects for profitable growth and remain confident we will reach our goal to improve FedEx Express operating income by $1.2bn to $1.5bn in fiscal 2020 versus fiscal 2017.”
In a conference call after the publication of its results, the company said it did not expect the latest round of US tariffs on Chinese products to have too much of an affect on its business as the China-US trade lane represents just 2% of total revenues.
However, Smith said the latest announcement was worrisome: “The reason it is worrisome is not because of just the individual dispute, it is because history is very clear that countries that pursue the most open markets are the ones the prosper the most and whose citizens’ income increases the most. Mercantilism does not work. There is example after example of it.”
Looking at operating income of its individual business units for the period, FedEx Express registered a 15% year-on-year improvement to $367m, FedEx Ground was up 10% to $667m and there was a 7% increase at FedEx Freight to $176m.
On revenues, Express was up 10% to $9.2bn, Ground increased 13% to $4.8bn, Freight was up 18% to $1.9bn and FedEx Services increased 4% to $417m.
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