For the first quarter, the FedEx Ground sector reported revenue of $914 million, up 5% from last year's $869 million, operating income of $116 million, up 15% from $101 million a year ago, and an operating margin of 12.7%, up from 11.7% the previous year.
The company said that segment's operating margin improved due to higher package yield and strict cost management. Average daily package volume grew just 1%, but the company noted that volume in the first quarter of fiscal 2003 included an estimated 140,000 to 150,000 daily packages as a result of the threat of a UPS work stoppage. The company estimates FedEx Ground has retained slightly over 50% of that volume through the first quarter.
The FedEx Freight segment reported revenue of $637 million, up 4% from last year's $615 million, operating income of $61 million, up 13% from $54 million a year ago, and an operating margin of 9.6%, up from 8.8% the previous year.
FedEx Freight said its operating margin increased due to revenue growth and cost management, along with the positive impact of $4 million in lower rebranding expenses during the first quarter as compared to last year.