FedEx posts strong earnings

FedEx enjoyed a strong quarter thanks to a robust holiday season and mild winter conditions in the U.S., but company executives warned that weakening global demand could hurt earnings through the remainder of the year.

FedEx said Thursday its third quarter revenue climbed to $10.56 billion, up 9 percent from the $9.66 billion it logged in the same period the year prior. Its operating income surged 107 percent to $813 million, and net income also jumped 126 percent to $521 million. The results beat analysts' projections, though FedEx warned that earnings growth may not be as strong in 2012, as Europe totters on the verge of a recession and demand ebbs elsewhere in the world.

Operating income benefitted from successful cost reduction and supply chain management campaigns. FedEx Freight's "significantly improved results" helped drive the uptick in operating income, the company said in a statement. FedEx chairman Frederick Smith said he expected the company to post strong results in its fourth fiscal quarter, though analysts warned growth could taper off as the year progresses.

"FedEx Corp. results were driven by improving yields, record holiday package shipping and exceptional performance at FedEx Ground," Smith noted. "We expect our solid performance to continue in our fourth quarter, capping off a strong fiscal year."

FedEx also settled with the federal government this week over charges that two of its subsidiaries, FedEx Ground and FedEx SmartPost, had discriminated against thousands of job applicants because of their race or gender. The supply chain and logistics firm will pay $3 million in the settlement, according to the Los Angeles Times, a figure that serves as the largest for any settlement in the history of the Labor Department's Office of the Federal Contract Compliance Programs.

FedEx was not immune to volatile energy prices in its last quarter, as its FedEx Express division was forced to raise fees on packages to offset an increase in fuel expenditures. Though the uptick in pricing caused a 4 percent drop in volume in the subsidiary, revenue rose 8 percent, according to the company.

FedEx projected that a "mild recession in the eurozone" could hurt its prospects in the second half of the year. What's more, the company noted high oil prices remained a concern.