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            september 21, 2019

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FedEx profits up 6.5pc profit as revenues rise 2.1pc to $11.02 billion


FedEx Corp has posted a 6.5 per cent year-on-year increase in first quarter profit to US$489 million, drawn on revenues of $11.02 billion, up 2.1 per cent, according to the Shipping Gazette.
Operating profit rose 5.2 per cent, while average daily volume rose 11 per cent for FedEx Ground and 26 per cent for FedEx SmartPost.
"Growth in overall demand drove our improved first quarter results," said FedEx chairman and CEO Frederick Smith, adding that the company remains focused on cutting costs as it faces challenging global economic conditions.
As the world's biggest air-cargo shipper by revenue, the company found that its FedEx Ground division continued to generate strong profits with its revenues growing 11 per cent, driven by growth in home delivery and commercial business services.
The company found that there has been a shift to cheaper and slower delivery services, such as ocean freight, driving many air shippers to rework their networks.
"The downshifting in the air cargo sector has been most notable in the market for consumer electronics and high-tech components," said the FedEx statement.
Last year, the company unveiled a restructuring plan, but warned that the bulk of benefits won't come until fiscal 2015, with a "moderate" pace of improvement this year.
"You can understand why customers are trading down because they get significantly better prices if they give up couple of days," said chief financial officer Alan Graf.
FedEx has responded by altering pricing and delivery options to tap into the trend. "Our pricing, I think, is right. It's just going to take us a little bit longer than we'd hoped," said Mr Graf.
Overseas, FedEx saw strong growth in its low-cost International Economy segment, where quarterly revenue grew nine per cent as package delivery increased 15 per cent.
FedEx expects the US economy to grow 1.6 per cent in 2013, which is down from its last quarterly estimate of two per cent.

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