FedEx (FDX 250.45, +7.91) has climbed 3.3% to a fresh record high, responding to strong results and guidance.
The logistics company reported above-consensus second quarter earnings of $3.18 per share on a 9.4% year-over-year increase in revenue to $16.30 billion, which was also ahead of expectations.
FedEx Chairman and CEO Frederick Smith noted that second quarter results put the company on track for another record holiday shipping season, which is likely a result of a growing number of consumers shopping online. That said, the company's freight segment also registered solid results.
Operating income improved 12.2% year-over-year to $1.38 billion while operating margin expanded to 8.5% from 8.2% one year ago.
Looking at the segment breakdown, FedEx Express revenue grew 8.2% to $9.35 billion while operating income improved 11.0% to $813 million. Segment operating margin increased to 8.7% from 8.5%. Higher base rates, strong international growth, higher fuel surcharges, and favorable currency exchange rates helped offset the impact of a cyberattack at TNT Express.
FedEx Ground revenue climbed 11.5% to $4.93 billion while operating income grew 12.0% to $521 million. Operating margin ticked up to 10.6% from 10.5%. Growth in the Ground segment was due to a 7.0% increase in average daily package volume and higher base rates.
FedEx Freight revenue increased 10.0% to $1.76 billion while operating income jumped 34.1% to $118 million. Operating margin improved to 6.7% from 5.5% one year ago. Less-than-truckload revenue per shipment increased 7.0% while average daily LTL shipments increased 4.0%.
Looking ahead, FedEx expects that earnings for the full year will be between $12.70 per share and $13.30 per share, which is well ahead of current market expectations. The company noted that the ongoing integration of TNT Express is now expected to cost $1.40 billion through 2020 after the previous estimate called for costs of $800 million. The company expects to incur integration costs of $450 million during fiscal 2018. FedEx reaffirmed expectations for 2018 capital expenditures of $5.90 billion.