FedEx reported net income up 23.9% y-o-y in the first quarter of its 2015 fiscal year to $606 million, as total revenue rose 6.0% to $11.68 billion. Operating income for the quarter was up 24.2% to $987 million.
The gains were driven by strong operational performance in all three of the company’s reporting segments (Express, Ground, and Freight), as well as by successful implementation of the profit improvement program instituted over a year ago. The impact of the profit improvement program has been significant, and is shown by the increase in operating margin both in the individual segments and for the company overall. FedEx said it’s goal in this regard was to have operating margins above 10% in all segments.
Operating income in FedEx’s core Express segment was up 35.2% to $369 million, while revenue rose 5.4% to $5.46 billion. Express operating margin was up 1.5 points to 6.8%. FedEx said the revenue and operating income increases were due to higher US domestic package volume and higher international export package yields, offset by lower Express freight revenue, but the big jump in operating income was driven by “benefits from profit improvement programs.”
Regarding Express volumes, average daily US Overnight Box volume was up 8.9% and Deferred volume rose 7.1%, more than offsetting a 6.4% decrease in Overnight Envelope volume. International Priority volume was up 0.7% and International Economy was up 3.0%, while International Domestic volume rose 3.4%.
FedEx’s Ground segment reported operating income up 12.8% to $545 million, as revenue rose 8.4% to $2.96 billion. Operating margin was up 0.7 points to 18.4%.
Operating income in the Freight segment jumped 69.7% to $168 million, and operating margin climbed 3.4 points to 10.4%. Freight revenue was up 13.0% to $1.61 million.