UPDATE 3-Rising revenue boosts FedEx quarterly profit
(Adds analyst comments, updates stock price)
CHICAGO, Sept 20 (Reuters) - Package delivery company FedEx Corp said on Tuesday quarterly profit rose more than expected on stronger revenue in its express, ground and freight business units, lifting its stock by almost 3 percent.
This was the first full quarter since FedEx completed its $4.8 billion acquisition of Dutch package delivery company TNT Express in May.
"As we integrate these networks and take advantage of the unmatched road capabilities of TNT Express, I am confident there is going to be a tremendous opportunity to increase" FedEx earnings, Chief Financial Officer Alan Graf said in a statement.
Excluding TNT integration costs, FedEx said it expected full-year fiscal 2017 earnings of $11.85 to $13.35 per share. Analysts' consensus forecast is $11.93.
Like main rival United Parcel Service Inc, FedEx is seen as a bellwether of U.S. economic activity.
FedEx said it expects moderate economic growth, with U.S. gross domestic product up 1.6 percent in 2016 and rising 2.3 percent in 2017.
U.S. industrial production should fall 0.7 percent this year and grow 2.2 percent in 2017, FedEx estimated.
Memphis-based FedEx posted net income for its fiscal first quarter ended Aug. 31 of $715 million or $2.65 per share, compared with $692 million or $2.42 per share a year earlier. On an adjusted basis the company earned $2.90 per share.
Analysts had on average expected earnings per share of $2.81.
Revenue rose to $14.7 billion from $12.3 billion, above analysts' expectations of $14.61 billion.
Margins rose at the company's FedEx Ground unit as average daily package volumes rose 10 percent over the previous year, driven by e-commerce. But margins fell at its Express and Freight units.
Revenue at TNT was $1.8 billion, unchanged from the year-ago quarter. Restructuring and integration costs totaled $20 million, FedEx said. The company also incurred $28 million in intangible asset amortization expenses for TNT in the quarter.
Edward Jones analyst Logan Purk said FedEx's results reflected a solid performance in both its express and ground units.
"But investors want more details about TNT and rightfully so because this is a massive acquisition, it's a bit of a game changer for them," Purk said. "I would love more details too but I am going to give FedEx management the benefit of the doubt because this is a new acquisition and it's a moving target for them."
In after-market trading, FedEx shares rose to $167.40 from a closing price of $162.65. (Editing by Richard Chang and Matthew Lewis)
© Copyright Reuters Ltd. All rights reserved. The information contained in this news report may not be published, broadcast or otherwise distributed without the prior written authority of Reuters Ltd.
