US courier company, FedEx, has reported consolidated results for the second quarter ended November 30 2019.
For fiscal 2020, the company reported a revenue of $17.3 billion USD (fiscal 2019: $17.8 billion USD), an operating income of $554 million USD (fiscal 2019: 1.17 billion USD) and a net income of $560 million USD (fiscal 2019: $935 million USD).
“Fiscal 2020 is a year of continued significant challenges and changes for FedEx, particularly in the quarter just ended due to the compressed shipping season,” said Fed Ex Chairman and CEO, Frederick Smith.
“We have significantly enhanced our e-commerce capabilities with strategic initiatives including year-round seven-day FedEx Ground delivery, enhanced large package capabilities and the insourcing of FedEx SmartPost packages.
These changes have been well-received by the marketplace as reflected in our record volumes this peak season. While we have experienced some higher-than-expected expenses this quarter, we forecast FedEx Ground operating margins to rebound to the teens in our fiscal fourth quarter as the bow wave of costs for these changes is absorbed
“Thanks to over 490,000 FedEx team members for their hard work and dedication to our Purple Promise of making every FedEx experience outstanding,” he said.
Operating results declined due to weak global economic conditions, increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer, a continuing mix shift to lower-yielding services and a more competitive pricing environment. In addition, the later timing of the Thanksgiving holiday resulted in the shifting of Cyber Week into December, which negatively impacted the quarter’s results.
These factors were partially offset by lower variable incentive compensation expenses and increased yields at FedEx Freight. Net income includes a tax benefit of $133 million USD from the recognition of certain foreign tax loss carryforwards.