FedEx earnings up 24%, stock jumps 5%

FedEx earned $606 million US in its first fiscal quarter, a 24 per cent increase from last year as shipping volumes continue to rise and the company reduced its stock repurchases.

The Memphis-based express shipper said it had earnings of $2.10 per share for the quarter ending Aug. 31, up from last year's $1.53 a share and above Wall Street expectations of $1.96 a share.

"FedEx Corp. is off to an outstanding start in fiscal 2015, thanks to very strong performance at FedEx Ground, solid volume and revenue increases at FedEx Freight and healthy growth in U.S. domestic volume at FedEx Express," CEO Frederick Smith said in a statement.

Revenue for the first quarter was $11.7 billion US, an increase of six per cent from the previous year. Volume rose in its express, ground and freight services.

The improved earnings and higher volumes show the way new business models are aligning to build the courier business.

Retailers are expanding their e-commerce offerings as consumers order more online. E-Commerce powered most of the six per cent increase in volume.

Manufacturing has moved to just-in-time processes, which sometimes necessitates the shipping of parts, and other business sectors have come to rely on same-day and next-day delivery for important documents.

In a conference call to discuss its quarterly earnings, Smith said the company expects to hire 50,000 workers for the holiday period, as it expects yet another surge in online shopping.

Rival UPS says it will hire up to 95,000 seasonal workers.

On Tuesday FedEx announced it will increase shipping rates by 4.9 per cent effective Jan. 5, 2015.