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FedEx Corp. Reports Higher First Quarter Earnings

September 16, 2015

MEMPHIS, Tenn., September 16, 2015 … FedEx Corp. (NYSE: FDX) today reported earnings of $2.42 per diluted share for the first quarter ended August 31, compared to adjusted earnings of $2.12 per diluted share a year ago. Without adjustment, FedEx earned $2.26 per diluted share last year.

“FedEx Corp. is performing solidly given weaker-than-expected economic conditions, especially in manufacturing and global trade,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “Our profit improvement program is on track and delivering impressive results, and I am very confident FedEx is well positioned to deliver value for shareowners, customers and team members in fiscal 2016 and beyond.”

First Quarter Results

FedEx Corp. reported the following consolidated results for the first quarter:

First Quarter Results

Fiscal 2016Fiscal 2015
As Reported
As Reported
Revenue$12.3 billion$11.7 billion$11.7 billion
Operating income$1.14 billion$996 million$1.06 billion
Operating margin9.3%8.5%9.1%
Net Income$692 million$612 million$653 million
Diluted EPS$2.42$2.12$2.26


Operating results rose compared to last year due to sharply increased operating income at FedEx Express, the benefit from one additional operating day at each of the company’s transportation segments and the continued positive impacts from the company’s profit improvement program. These benefits were partially offset by higher incentive compensation accruals, higher self-insurance reserves and operating costs at FedEx Ground, and lower-than-anticipated volume at FedEx Freight. Fuel had a slightly negative net impact to operating income. Costs related to the pending acquisition of TNT Express were immaterial during the quarter.

During the quarter, the company acquired 1.1 million shares of FedEx common stock.



FedEx now projects adjusted earnings for fiscal 2016 to be $10.40 to $10.90 per diluted share before year-end mark-to-market pension accounting adjustments, aided by benefits from the profit improvement program. The outlook assumes moderate economic growth and does not include any operating results or costs related to TNT Express. The capital spending forecast for the fiscal year remains $4.6 billion.

“Our new fiscal 2016 outlook is modestly lower than our initial forecast due primarily to weaker LTL industry demand and higher than expected self-insurance reserves and operating costs at FedEx Ground,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “We still expect strong earnings growth this year, as we remain focused on executing our profit improvement program, leveraging e-commerce growth and enhancing our revenue quality.”


2016 Rate Increases

As announced on September 15, 2015, FedEx Express, FedEx Ground and FedEx Freight will increase shipping rates by an average of 4.9% effective January 4, 2016. FedEx is also increasing surcharges for FedEx Ground shipments that exceed the published maximum weight or dimensional limits, and updating certain fuel surcharge tables at FedEx Express and FedEx Ground effective November 2, 2015. Details of all changes to rates and surcharges are available at


FedEx Express Segment

For the first quarter, the FedEx Express segment reported:

  • Revenue of $6.59 billion, down 4% from last year’s $6.86 billion
  • Operating income of $545 million, up 45% from $377 million a year ago
  • Operating margin of 8.3%, up from 5.5% the previous year

Revenue decreased 4% as lower fuel surcharges and unfavorable currency exchange rates more than offset improved base rates. U.S. domestic package volume grew by 1%, driven by growth in deferred box and overnight envelope. U.S. domestic revenue per package decreased 3% due to lower fuel surcharges, partially offset by strong base rates. FedEx International Economy volume grew 4%, while FedEx International Priority volume decreased 5%. International export revenue per package decreased 7%, as lower fuel surcharges and unfavorable currency exchange rates were partially offset by higher rates and improved package weights.

Operating income and margin improved due to higher base rates, the benefit from one additional operating day, and lower international expenses due to currency exchange rates, more than offsetting higher incentive compensation accruals. Profit improvement program initiatives continued to improve revenue quality and constrain expenses.


FedEx Ground Segment

For the first quarter, the FedEx Ground segment reported:

  • Revenue of $3.83 billion, up 29% from last year’s $2.96 billion
  • Operating income of $537 million, down 1% from $545 million a year ago
  • Operating margin of 14.0%, down from 18.4% the previous year

Revenue increased due to the inclusion of GENCO results, the recording of FedEx SmartPost service revenues on a gross basis versus the previous net treatment, and higher ground revenue per package and volume. FedEx Ground average daily volume, including FedEx SmartPost shipments, grew 4% in the first quarter due primarily to continued growth in FedEx Home Delivery. FedEx Ground yield increased 11% due to the recording of FedEx SmartPost revenues on a gross basis, higher dimensional weight charges and increased rates, partially offset by lower fuel surcharges.

Operating income decreased slightly due to increased self–insurance reserves, and higher-than-expected operating costs due in part to larger package sizes. These factors more than offset the benefits from higher revenue and one additional operating day. Operating margin decreased primarily due to increased self-insurance reserves, the inclusion of GENCO results and the change in FedEx SmartPost revenue reporting, which collectively reduced year-over-year operating margin by 4.0 percentage points.


FedEx Freight Segment

For the first quarter, the FedEx Freight segment reported:

  • Revenue of $1.60 billion, essentially flat with last year’s $1.61 billion
  • Operating income of $132 million, down 21% from $168 million a year ago
  • Operating margin of 8.2%, down from 10.4% the previous year

Less-than-truckload (LTL) average daily shipments declined 1% due to weak industry demand. LTL revenue per shipment was down 1% as higher rates from yield initiatives were more than offset by lower fuel surcharges.

Operating results declined primarily due to salaries and employee benefits expense outpacing lower-than-anticipated volume.


Corporate Overview

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $48 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 325,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and first quarter fiscal 2016 Statistical Book. These materials, as well as a webcast of the earnings release conference call to be held at 8:30 a.m. EDT on September 16 are available on the company’s website at A replay of the conference call webcast will be posted on our website following the call.

The Investor Relations page of our website,, contains a significant amount of information about FedEx, including our SEC filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media and others interested in the company to visit this website from time to time, as information is updated and new information is posted.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, our ability to execute on our profit improvement programs, legal challenges or changes related to FedEx Ground’s owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


Reconciliation of FedEx Corporation’s Non-GAAP Financial Measures to GAAP Financial Measures

The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational or non-recurring in nature. Excluding from first quarter fiscal 2015 results the credit associated with the segment reporting change will assist investors in understanding and allow for more accurate comparisons of the company’s core operating performance. As required by SEC rules, the table below presents a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures. The inability to predict the amount of any future year-end mark-to-market pension accounting adjustments and the amount and timing of any operating results and integration planning and acquisition-related costs with respect to TNT Express makes a reconciliation of the forecasts for adjusted earnings per diluted share impracticable.


First Quarter Fiscal 2015

Dollars in millions, except EPS


Operating Income2Operating MarginNet IncomeDiluted Earnings Per Share
Non-GAAP measure$9968.5%$612$2.12
Segment reporting change1670.6%410.14
GAAP measure$1,0629.1%$653$2.26



1 – Represents the credit at Corporate resulting from the change in recognizing expected return on plan assets for our defined benefit pension and post-retirement healthcare plans at the segment level, as discussed further in our fiscal 2015 Annual Report on Form 10-K.

2 – Does not sum to total due to rounding.