Memphis, TN, United States (4E) – Fedex Corp. said its profit in the first quarter topped analysts’ estimates as the world’s biggest cargo airline operator cut costs as customers shift toward cheaper shipping options.
In the quarter ended Aug. 31, net income jumped 6.5 percent to $489mn, or $1.53 per share, from $459mn, or $1.45, in the previous year, according to a company statement released Wednesday. The median estimate by 28 analysts surveyed by Bloomberg News forecasts $1.50 per share. Sales climbed to $11bn, an increase of 1.9 percent.
The company also said it would raise the shipping rates at their domestic express-shipping business — its biggest unit — by an average of 3.9 percent. The new rates will be implemented starting Jan. 6. In July, the company’s freight business increased its general rate by 4.5 percent.
FedEx and its rivals in the air-cargo industry are facing increased preference by clients for cheaper and slower delivery services. This industry downshift is most notable in the consumer electronics and high-tech components market.
The Memphis, Tennessee-based company is regarded as an economic bellwether because of the broad range of goods it ships across the globe.
FedEx began lowering costs last year by $1.7bn, and it plans to park older planes, cutt capacity to Asia and reduce its workforce by 3,600 jobs through buyouts.