By Nick Carey
CHICAGO (Reuters) - Increased U.S. domestic and international volumes sparked higher quarterly profit at FEDEX (FDX.NY)orp, the package delivery company said on Wednesday, but quarterly earnings and its full-year outlook fell short of expectations.
Both FedEx and main rival United Parcel Service Inc are in the final days of their holiday peak season, which has boomed over the past decade due to the rise of e-commerce. Last year both companies were hit by a last-minute surge in online orders and bad weather that left an estimated 2 million packages undelivered on Christmas Eve.
The two companies have worked closely with online retailers in hopes of avoiding a repeat of last year, and so far the plans appeared to be paying off.
Memphis-based FedEx reported net income of $616 million for the second quarter ended Nov. 30, compared with $500 million a year earlier. Earnings per share came to $2.14 versus $1.57 in the same quarter last year. Wall Street analysts expected $2.22.
Revenue totaled $11.9 billion, below analysts' expectations of $11.99 billion. Revenue rose in all of the company's major business segments.
Volumes at FedEx Ground in the United States were up 7 percent for the quarter, though revenue per package was down 2 percent due in part to lower fuel surcharges, which fall as fuel prices come down.
Package volumes were up 5 percent at its international economy business, and rose 1 percent at its international priority business.
FedEx said its profits got a slight boost from an ongoing profit improvement plan, falling fuel prices and lower pension expenses, but those benefits were partially offset by aircraft maintenance expenses.
The company still expects earnings per share for the fiscal year ending May 31, 2015 to be in a range from $8.50 to $9.00. Analysts have predicted $9.14.
Analysts said results from FedEx Ground in the United States and its trucking unit, FedEx Freight, in particular fell short. The company's full-year outlook was also seen as too conservative.
"We believe that investors were anticipating an upside second quarter and an increase in (full-year) 2015 guidance ... and as a result we expect pressure on (FedEx) stock today," UBS analysts wrote in a note to clients.
In premarket trading, FedEx shares were down 3.8 percent at $167.59.
(Editing by Franklin Paul and Jeffrey Benkoe)
