FedEx's Q3 earnings fall on higher fuel costs, but revenue rises
Delivery service company FedEx Corp. (NYSE:FDX) said Thursday its third quarter earnings dropped despite strong revenue growth, due to bad weather and higher fuel costs.
For the third quarter ending February 28, the company earned a net income of $231 million, or 73 cents per diluted share, down 3% from $239 million, or 76 cents per diluted share, for the year-ago period.
Excluding costs related to the combination of its freight services, the company's third quarter earnings were 81 cents per diluted share, falling just shy of the 82 cents per share estimated by analysts.
Meanwhile, revenues rose 11% year-over-year to $9.66 billion, exceeding analyst expectations of $9.61 billion. However, the revenue increase was partially offset by a 12% increase in operating expenses.
"Successful yield management initiatives helped drive significant revenue growth across our transportation segments in the third quarter, although results were dampened by severe winter storms and higher-than-expected fuel costs," said FedEx's CFO, Alan B. Graf Jr.
Revenues from the company's express delivery segment grew 11% to $6.05 billion. Sales from the small-packages delivery division rose 14% to $2.18 billion, while the freight delivery segment reported an 8% revenue increase to $1.12 billion.
Looking forward, FedEx projects adjusted earnings in the range of $1.66 to $1.83 per diluted share for the fourth quarter, and between $4.83 to $5.0 per diluted share for fiscal 2011.
Since the announcement, FedEx's shares rallied 3.4% to trade at $88.18 as of 2:50 pm EST.
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