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            september 23, 2019

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FedEx quarterly profit up 3.2pc


US Express giant FedEx's quarterly net profit increased 3.2 per cent year on year to US$715 million, drawn on revenues of $14.7 billion, which increased 16.3 per cent, according to Shipping Gazette.
Earlier this week, FedEx announced several rate increases for 2017, which included changing the FedEx Express and FedEx Ground's US domestic dimensional weight adviser from 166 to 139.
Operating profit during the company's financial year's first quarter was up 9.5 per cent to $1.26 billion year on year, the company said.
"We expect revenue and earnings to increase driven by volume growth and improved yields at all our core companies," said company chairman, president and CEO Frederick Smith.
"The integration of TNT Express, which includes operations in more than 200 countries, is proceeding smoothly and on schedule," he said.
"More than 20 teams are working in operations and other areas to positively transform FedEx, TNT into a seamless worldwide operation," Mr Smith said.
US domestic package volume was up one per cent, due to overnight box and envelope volume growth, but with FedEx International Priority volume down one per cent.
FedEx added that operating results gains were driven by higher base rates and ongoing cost efficiencies with $22 million of expenses related to the TNT Express integration. The TNT Express segment contributed $1.80 billion in revenue.
FedEx Ground revenue was up 12 per cent at $4.29 billion, and operating profit was up 14 per cent to $610 million. Gains were made through higher prices and a 10 per cent volume increase led by e-commerce and commercial package growth.
FedEx Freight revenue was up four per cent at $1.66 billion, with operating income up two per cent at $135 million. Average daily shipments were up eight per cent offset lower fuel surcharges and shipment weight, said FedEx.
FedEx vice president Michael Glenn expects another record peak season, explaining that the rapid growth of e-commerce has driven significant shifts in demand.
Mr Glenn also reported increasing demand for Monday delivery. "The intensity for demand on Monday has accelerated in recent years, as more and more retail locations have started serving as fulfilment centres for e-commerce orders," he said.
"We expect each of the four Mondays during the upcoming peak period to be among the busiest in our company's history," said Mr Glenn.
Bigger and heavier packages were in greater demand, he said, due to e-commerce growth upping demand for delivery of "everything from large screen TVs to mattresses and trampolines".
On TNT's integration, chief financial officer Alan Graf said: "We had a seamless and very successful first day when we acquired TNT on May 25. "
Mr Graf also he saw the combination of the two businesses as transformative and expect significant synergies.
"We remain confident in our initial views of the value of this acquisition and are targeting to exit the end of the four-year integration with annual synergies of $750 million," he said.

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