Oct 29 (Reuters) – FedEx Freight forecast earnings for the crucial holiday quarter above analysts’ estimates on Thursday, citing improvement in volumes after reporting bigger-than-expected quarterly profit and revenue thanks to better pricing.
Shares of the company rose 2.1% in extended trading.
US shippers in the third quarter paid the most to move freight since 2021, data from the US Bank Freight Payment Index released on Thursday showed.
A surge in diesel prices due to the Iran war and a reduction in available truck drivers following federal immigration crackdowns also helped send rates higher.
Shipper spending surged 32.1% from the third quarter last year on widespread cost pressure, the US Bank Freight Payment Index showed.
Trucking firms generally pass on the higher costs to customers as a surcharge, but a sharp rise has hurt margins for some truckers.
FedEx Freight, which was spun off from parent FedEx in June, has focused on cutting costs and boosting revenue by adding more high-priced freight, as well as stabilizing volumes.
The largest US less-than-truckload company reported an adjusted profit of $1.49 per share for the quarter ended September 30, compared with $2.10 per share the year before.
The decline was tied largely to FedEx separation costs and higher fuel prices.
Quarterly revenue, meanwhile, rose 8% to $2.44 billion, helped by better yields and fuel surcharges.
Analysts expected the company to report adjusted profit of $1.36 per share and revenue of $2.37 billion, according to data compiled by LSEG.
FedEx Freight expects fourth-quarter adjusted profit between 65 and 75 cents a share, above analysts’ expectation of a 53-cent profit.
It also forecast revenue for the seven months to December in the range of $5.58 billion to $5.65 billion, up 4% to 6% from a year before.
Following its June 1 spinoff from FedEx, FedEx Freight has switched to a calendar year from its previous June-May fiscal year.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Shreya Biswas)
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