CHICAGO (Reuters) - Package delivery company FedEx Corp (FDX.N) on Wednesday reported a better-than-expected quarterly net profit, saying higher margins, cost-cutting and a lower effective tax rate offset weak industrial production and global trade.
The news sent FedEx stock up 5 percent in after-market trading.
Often seen as a bellwether of U.S. economic activity, Memphis, Tennessee-based FedEx reiterated its fiscal 2016 earnings forecast between $10.40 and $10.90 per share.
The company reported adjusted net income for its fiscal second quarter ended Nov. 30 of $729 million, or $2.58 per share, up 17 percent from $622 million, or $2.16 per share, a year earlier.
Analysts had on average expected earnings for the fiscal second quarter of $2.51 a share.
FedEx said its adjusted earnings per share reflected one-off expenses of 9 cents a share related to settling litigation over its use of independent contractors as drivers at FedEx Ground and 4 cents related to its pending acquisition of Dutch package deliver company TNT Express NV TNTE.AS.
During a conference call with analysts, executives said the company expects to receive “final, unconditional approval” from the European Union for its takeover bid for TNT in the second half of January. FedEx expects to complete the acquisition of the Dutch carrier in the first half of 2016.
FedEx “posted solid earnings despite continued weakness in industrial production and global trade, and we are making impressive progress toward our goals to increase margins, earnings per share, cash flows, and returns on invested capital,” Chief Executive Frederick Smith said in a statement.
Revenue for the quarter totaled $12.5 billion, up from $11.9 billion a year earlier.
The company said revenue at its more lucrative international segment fell 6 percent to $6.59 billion from $7.02 billion, which it said stemmed in part from the strong U.S. dollar.
The company’s Ground network saw revenue jump 32 percent thanks to the inclusion of an acquisition from last year but also reflecting higher package volumes and higher prices charged to customers.
Smith said a record number of holiday packages, driven by the “steady rise” of ecommerce, was currently working its way through the company’s network.
On Monday, Dec. 14, executives said the company picked up 26 million packages and that it was experiencing a “record breaking” holiday season.
In after-market trade, FedEx shares were up 5 percent at $156.40.
Reporting by Nick Carey; Editing by Leslie Adler, Peter Cooney and David Gregorio