FedEx has announced its results for Q1 ended August 31, reporting total revenue at $19.3bn, up by $2.3bn Y-o-Y. Its operating income is reported to be $1.59bn, compared to $980m in Q1 2019; while its operating margin increased by 2.5% Y-o-Y.
In its Express segment, revenue rose to $9.6bn in 2020, an increase from last year’s $8.9bn. Operating income has more than doubled compared to last year’s performance, showing an income of $710m in Q1 2020, while it was at $285m in last year’s first quarter. Its operating margin also jumped from 3.2% in Q1 2019 to 7.4% in Q1 2020.
FedEx Ground segment revenue increased to $7.0bn in Q1 2020, from $5.2bn last year. While operating income rose to $834m, from $644m last year.
Its Freight segment reported a revenue of $1.9bn in 2020, whereas it showed a revenue of $1.7bn last year. Operating income rose to $274m from last year’s $194m.
This year’s and last year’s quarterly consolidated results have been adjusted for TNT Express integration expenses of $49m for this year and $71m for last year.
“Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer.
Operating results increased due to volume growth in FedEx International Priority and US domestic residential package services, yield improvement at FedEx Ground and FedEx Freight, and one additional operating weekday. These factors were partially offset by costs to support strong demand and to expand services, variable compensation expenses, and COVID-19 related costs incurred to ensure the safety of FedEx team members and customers.
The capital spending forecast for the year is up $200m to $5.1bn, driven by additional capacity initiatives to support increased volume levels. “While business demand improved in the first quarter, continued uncertainties cloud our ability to forecast full-year earnings,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “However, we expect to continue to benefit from our strong position in the U.S. and international package and freight markets, yield improvement opportunities and cost management initiatives.”