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A Look at FedEx’s Revenues in Fiscal 2Q18

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FedEx’s revenues

FedEx (FDX) reported revenues of $16.3 billion in fiscal 2Q18. That was a 9.3% rise on a YoY (year-over-year) basis from $14.9 billion in fiscal 2Q17. The company surpassed Thomson Reuters–surveyed analysts’ revenue estimate of $15.6 billion by 4.5%.

FedEx’s revenues rose across all its segments in fiscal 2Q18. The rise was driven by higher base rates, volume growth, and a positive fuel net impact at each of FDX’s transportation verticals. However, the rise was negatively impacted by a revenue loss due to the cyberattacks on TNT Express’s IT (information technology) systems.

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The above graph shows that FedEx’s revenue growth was in the high teens throughout fiscal 2017. That was mainly due to the TNT Express acquisition and the e-commerce (AMZN) trend inside and outside the United States. That pushed its ground business e-commerce residential deliveries, resulting in revenue growth. The average revenue growth in the last eight quarters, including fiscal 2Q18, was 13.4%, which is indicative of solid top-line growth.

FedEx: vertical revenues

FedEx operates in four verticals—FedEx Express, FedEx Ground, FedEx Freight, and FedEx Service. TNT Express’s results were included in FedEx Express’s revenues starting in fiscal 1Q18. Before intersegment eliminations, this segment accounted for 57.3% of FDX’s revenues. Next is the Ground vertical with a 30.2% share. The Freight and Services divisions accounted for 10.8% and 1.7%, respectively, of fiscal 2Q18’s total revenues.

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Chair and CEO (chief executive officer) Frederick Smith stated, “Strategic execution by the FedEx team and a stronger global economy drove improved financial results, and we believe we are well positioned for profitable long-term growth….FedEx is on track for another record holiday shipping season and we’re pleased to say the outstanding service around the world and across our portfolio during the second quarter has continued into December.”

Peer group revenue growth

United Parcel Service’s (UPS) 3Q17 revenues rose 7%, driven by online shopping and higher base rates. Another major LTL (less-than-truckload) service provider, Old Dominion Freight Lines (ODFL), reported an 11.5% rise in revenue in the same quarter. ODFL’s revenues grew due to increased LTL (IYJ) tonnage per day and higher LTL revenue per hundredweight.

XPO Logistics (XPO), the second-largest LTL group in the United States, registered 4.8% growth in its 3Q17 revenues. The company’s revenues were higher due to e-commerce demand for contract logistics and a last-mile delivery rise.

Next, we’ll analyze FedEx Express’s verticals in fiscal 2Q18.

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