Fedex Corporation (FDX), a provider of transportation, e-commerce and business services, has recorded a 23.93 percent increase in profit for the quarter ended Aug. 31, 2014. Higher sales growth and improvement in margins on reduction in expenses have helped the company to report substantial increase in earnings for the quarter.
The company earned $606 million or $2.10 a share in the first-quarter compared with $489 million or $1.53 a share a year ago. Analysts on average had predicted net income of $1.96 a share.
Revenue during the first-quarter grew 5.99 percent to $11,684 million from $11,024 million in the last year period.
Total expenses as a percentage of revenues decreased to 91.55 percent from 92.79 percent in the same period last year. That has resulted in improvement of 124 basis points in operating margins to 8.45 percent. The company disclosed operating income of $987 million, compared with $795 million in the last year period.
''FedEx Corp. is off to an outstanding start in fiscal 2015, thanks to very strong performance at FedEx Ground, solid volume and revenue increases at FedEx Freight and healthy growth in U.S. domestic volume at FedEx Express,'' said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. ''More customers are relying on FedEx because they appreciate the competitive advantages provided by our broad portfolio of solutions.''
The company reaffirmed its fiscal 2015 earnings forecast of $8.50 to $9.00 a share.
Cash Flow
Fedex Corp has generated cash of $982 million from operating activities during the quarter, up 5.71 percent or $53 million when compared with the last year period.
The company has spent $716 million cash to meet investing activities during the quarter, as against cash outgo of $562 million in the last year period. It has made net capital expenditure of $716 million during the quarter, which was higher by 27.40 percent or $154 million, from a year ago.
The company's free cash flow accounted for 27.09 percent of operating cash flow for the quarter, compared with 39.50 percent in the last year period.
The company has spent $741 million cash to meet financing activities during the quarter, as against cash outgo of $181 million in the last year period. The company's cash dividend payment increased 18.75 percent or $9 million to $57 million.
As on Aug. 31, 2014, the company's cash balance stood at $2,416 million, down 52.59 percent or $2,680 million from Aug. 31, 2013.
Working Capital
Fedex Corp has witnessed a decline in the working capital over the last one year. The company's working capital stood at $4,097 million as at Aug. 31, 2014, down $1,873 million or 31.37 percent from $5,970 million on Aug. 31, 2013. It registered a decrease in current ratio to 1.80 as at Aug. 31, 2014 from 2.08 on Aug. 31, 2013.
Debt Position
The company has witnessed an increase in long-term debt over the last one year. As on Aug. 31, 2014, long-term debt stood at $4,735 million, up 72.87 percent or $1,996 million, from Aug. 31, 2013. The company total debt was 14.53 percent of total assets as on Aug. 31, 2014, compared with 8.89 percent on Aug. 31, 2013.
Shares of the company gained $6.07 or 3.80 percent to trade at $160.54 on Wednesday (9:35AM).
