FedEx Corp. said today that its fiscal first-quarter earnings fell 27% because U.S. express-package sales declined in the slowing economy. Profit excluding a charge in the quarter ended Aug. 31 fell to $124 million from $169 million in the year-earlier quarter, while sales rose 5.4% to $5.04 billion.
FedEx said its truck deliveries of packages and cargo climbed in the first quarter as companies switched to less-expensive and slower ground shipments. Deliveries have yet to return to normal this quarter after the terrorist attacks on New York and Washington led to a two-day grounding of U.S. flights, FedEx said.
“Since our first quarter ended, the global economy has weakened further,” said FedEx CFO Alan Graf. “It is extremely difficult for us to fully assess the financial effects of last week's events. Our volumes were substantially reduced last week while our aircraft were grounded. Our volumes have not recovered to levels existing before the tragedy.”
In the first quarter, the company generated $17.12 in revenue for express shipments on average, more than double the $6.10 from package deliveries by truck. Expenses rose 7%, outpacing the 5.4% increase in sales from $4.78 billion, the company said. Average daily shipments of FedEx Express overnight packages fell 7% as U.S. manufacturers and computer-related companies shipped less. International express shipments declined 1%.
FedEx Ground shipments rose 8% and rates rose another 8%, increasing sales to $543 million from $423 million. Profit before taxes and interest rose 40% at FedEx Ground and fell 53% at FedEx Express, where sales slid 4.5% to $3.74 billion.