FedEx Corp. said restructuring charges drove down net quarterly earnings as revenues were bolstered by more U.S. ground and international deliveries.
Second-quarter net profit, including charges for staff restructuring, was $91 million, or 30 cents a share, down from $245 million, or 81 cents a share, in the same quarter last year. Cutting out the costs related to retirements and related changes, quarterly profit would have been $266 million, or 87 cents a share, according to the company.
For the Freight Segment, second quarter revenue was $664 million, up 5% from last year's $634 million; operating income was $66 million, up 6% from $62 million a year ago and operating margin was 10.0%, up from 9.9% the previous year.
Average daily less-than-truckload (LTL) shipments decreased 2% compared to last year's second quarter, although November showed favorable year-over-year growth. LTL yield improved 6% year over year due to higher fuel surcharge revenue, the growth of Freight's interregional service, a 5.9% general rate increase on June 30, 2003 and favorable contract renewals.
FedEx International Priority (IP) revenue grew 14% for the quarter, as IP revenue per package grew 10%, primarily due to an increase in weight per package and exchange rate differences. IP average daily package volume grew 4% year over year, led by 11% growth in Asian export volume and improving European and Latin American volume growth rates. U.S. domestic express average daily package volume declined slightly, while package yield was unchanged, company officials said.
For FedEx Ground service, average daily package volume grew 3% in the second quarter, up from 1% growth in the first quarter. FedEx Ground volume growth rates continue to be affected by year-over-year comparison with last year which was boosted by the threat of a UPS work stoppage. Lower than normal customer inventory levels in the retail sector also affected volumes. Yield per package increased 4%, attributable to last January's rate increase and an increase in extra service and fuel surcharge revenue.