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FedEx 2Q higher
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December 19, 2001: 9:04 a.m. ET
Package carrier's second quarter benefits from state tax settlement.
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NEW YORK (CNN/Money) - FedEx Corp. reported a higher second-quarter profit Wednesday that blew past Wall Street expectations as the No. 2 package delivery company benefited mainly from a state tax settlement and federal aid in the wake of the Sept. 11 terrorist attacks.
For the quarter ended Nov. 30, FedEx posted earnings of $245 million, or 81 cents a share, up from earnings of $194 million, or 67 cents a share, a year earlier. Analysts polled by earnings tracker First Call anticipated a profit of 64 cents a share.
The Memphis, Tenn.-based company gained $116 million, or 24 cents a share, in federal compensation after the country's air travel network was shut down immediately following the terrorist attacks.
The company also benefited from a state tax settlement at FedEx Express and lower fuel costs.
Third-quarter revenue rose 5 percent to $5.1 billion from $4.9 billion.
On Oct. 29, FedEx raised its guidance for second-quarter profit, saying it expected earnings of 40 cents-to-45 cents a share excluding federal aid. At the time, that was higher than Wall Street forecasts for 35 cents a share, according to First Call.
FedEx also said it expects U.S. average daily package volume in the current quarter to fall 5 percent below a year ago, and for FedEx International Priority shipments to be down about 2 percent. As a result, the company said third-quarter results would come in at the low end of expectations, giving a range of 25 cents-to-35 cents a share. Analysts are anticipating a profit of 35 cents a share, according to First Call.
However, the company anticipates FedEx Express U.S. domestic average daily package volume to be flat compared with a year earlier. FedEx said it now expects fourth quarter earnings of 70 cents-to-80 cents a share. Analysts were forecasting a 61 cents a share profit.
FedEx Express reported a 4 percent decline in revenue in the second quarter, but a 14 percent jump in operating income on the strength of the $116 million it received as part of the Air Transportation Safety and System Stabilization Act. The government doled out aid to air carriers after the terrorist attacks to help compensate for lost business in the immediate aftermath.
FedEx Ground reported a 16 percent increase in revenue to $677 million and a 40 percent jump in operating income to $80 million as the company expanded its small and medium-sized business customer base and its home delivery service. Home delivery accounted for about half the unit's 11 percent volume growth in the quarter from a year ago.
FedEx Freight reported revenue of $487 million and operating income of $47 million. 
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