News Column

United States : FEDEX beats ground shipping strength

June 28, 2014

Earnings from FedEx are closely watched. The company's scale and its role in the economy make it an important bellwether. It's results have to say about the general state of the economy.

Its report seems to corroborate a view of a slow but steady economic recovery in the US. The company delivered a healthy beat on the top and the bottom lines, outpacing rival United Parcel Service.

Earnings growth looked healthy; 4Q earnings per share of $2.46 beat the $2.36 consensus and rose nearly 11% year over year. Revenue showed healthy gains, rising 3.5% to hit $11.8 billion, exceeding calls for $11.66 billion. The company's EPS grew by 8.3%, and revenue rose 2.9%, indicating it has been doing a good job of increasing margins in the face of middling revenue growth.

FedEx showed that cheaper options as ground shipping were growing faster than the more expensive Express segment. This trend still seems to be ongoing.

As a result of growth, ground shipping revenue grew by 8%, compared to flat growth in the company's Express segment, which accounts for more than half of its overall business. The Express business has been undergoing some changes, such as slashing less profitable air shipping routes.

United Parcel Service's results. UPS saw a 2.6% growth in revenue for its US domestic segment, led by its UPS SurePost and Second Day Air services. Both of these cater to value-conscious consumers and have seen strong demand from e-commerce companies.

FedEx's results for clues as to the state of the US and global economy and found that the company had some positive things to say about US GDP growth. The US economy should grow by around 2.2% this calendar year, which is lower than forecasts due to the weather, but higher than the 2% projected by the International Monetary Fund.

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Source: TendersInfo (India)