FedEx Q2 revenue up 5%, net income down 12%
Superstorm Sandy impacted the quarter's results by $0.11 per diluted share due to reduced shipment volumes and incremental operating costs, company said Wednesday. Results for the second quarter are: revenue of $11.1 billion, up 5% from $10.6 billion the previous year; operating income of $718 million, down 8% from $780 million last year; operating margin of 6.5%, down from 7.4% the previous year; and net income of $438 million, down 12% from last year's $497 million.
The company projects earnings to be $1.25 to $1.45 per diluted share in the third quarter and reaffirms its forecast of $6.20 to $6.60 per diluted share for fiscal 2013 before charges related to the company's previously announced voluntary buyout program. The company expects the pretax cost of the voluntary buyout program to range from approximately $550 to $650 million, or $1.09 to $1.29 per diluted share, but actual costs will depend on employee acceptance rates. This guidance assumes the current market outlook for fuel prices.
The company reported earnings of $1.65 per diluted share in last year's third quarter, which included a $0.10 per share reversal of a reserve associated with a legal matter at FedEx Express. The capital spending forecast for fiscal 2013 remains $3.9 billion.
"We are steadfastly committed to the $1.7 billion of annual profit improvement actions, primarily at FedEx Express, which we announced in October. We expect to begin to see the benefits of these actions in fiscal 2014, with a significant portion of the profit improvement achieved by the end of fiscal 2015. Meanwhile, the mounting uncertainty in the U.S. related to fiscal policies and their potential to impact earnings by further restraining economic growth is a concern," said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer.
The FedEx Express segment reported revenue of $6.86 billion, up 4% from last year's $6.58 billion; operating income of $230 million, down 33% from $342 million a year ago; and operating margin of 3.4%, down from 5.2% the previous year.
The FedEx Ground segment reported revenue of $2.59 billion, up 11% from last year's $2.34 billion; operating income of $412 million, up 4% from $398 million a year ago; and operating margin of 15.9%, down from 17.0% the previous year. ■