MEMPHIS, Tenn. (AP) — FedEx’s fiscal first-quarter net income rose 24 percent, thanks partly to a strong performance by its ground division.
Its results beat analysts’ estimates. The stock climbed before the market open on Wednesday.
FedEx is getting a boost from the growth in online shopping, which generates strong business in ground shipments. That helps to offset some sluggishness in FedEx’s core express-delivery unit.
The package delivery company earned $606 million, or $2.10 per share, for the three months ended Aug. 31. That’s up from $489 million, or $1.53 per share, a year ago.
Analysts surveyed by FactSet expected earnings of $1.96 per share.
Aside from the strong performance of FedEx Ground, Chairman, President and CEO Frederick Smith said in a statement that the Memphis, Tennessee company’s results were also bolstered by solid volume and revenue increases at its freight division and healthy growth in U.S. domestic volume at FedEx Express.
Revenue climbed 6 percent to $11.68 billion, topping Wall Street’s estimate of $11.48 billion.
Revenue for FedEx Freight surged 13 percent. FedEx Ground’s revenue rose 8 percent, while revenue for FedEx Express increased 4 percent.
FedEx Corp. maintained its guidance for fiscal 2015 earnings between $8.50 and $9 per share. Analysts predict earnings of $8.84 per share.
The announcement of the company’s financial results comes one day after FedEx said that it will raise U.S. rates for express, ground and home-delivery shipments by an average of 4.9 percent in January. It said that rates would also change for FedEx SmartPost, which uses the U.S. Postal Service for final delivery, although it didn’t say how much. The express increase will apply to deliveries in, to or from the U.S. FedEx Freight will also boost prices an average of 4.9 percent within North America.
Also starting Jan. 5: New pricing that gives more emphasis to dimensions for lightweight ground-shipping packages.
Shares of FedEx gained $4.15, or 2.7 percent, to $158.81 in premarket trading.
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