FedEx Q1 Earnings: How Did The Segments Perform?

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Logistics giant FedEx (NYSE: FDX) announced solid first quarter fiscal year 2017 earnings, in which its revenues rose 19.4% over the prior year quarter to $14.6 billion. The growth in revenues was mainly attributed to the addition of TNT Express to the company’s financials. Excluding the numbers of TNT Express, the company’s top line grew a moderate 5% over the prior year quarter. Below we look into the performance of FedEx Express and FedEx Ground, the primary revenue drivers for FedEx.

FedEx Express 

FedEx Express has historically been the largest revenue contributor to FedEx’s top line, with the division contributing more than 50% to the company’s revenues in the past three years. In the first quarter of the current fiscal year, the segment grew at a moderate 1% over the prior year quarter. The growth was driven by a 4% surge in the volumes of U.S. Overnight and a 5% surge in  freight revenues, which was driven by 8% average growth in volumes of U.S Postal Service.

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FedEx Ground

FedEx Ground, which includes non-Express deliveries to businesses and residences in the U.S. and Canada, has been outpacing the company’s total growth in recent years. In the first quarter of the current fiscal year, the division’s revenues increased 12% over the prior year quarter to $4.3 billion. The booming e-commerce trade resulted in a 10% rise in package volumes and a 2% rise in yield, both of which positively impacted the top line of FedEx Ground. Additionally, GENCO, acquired to strengthen the division’s offerings for the e-commerce trade, added another 10% to the division’s top line.

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