FedEx 1Q profit rises 40%; adjusts outlook for contract

NASHVILLE, Tenn. (AP) - FedEx Corp. said Thursday its first-quarter profit rose 40%, driven by strong demand for ground and international express shipments.

Memphis-based FedEx also said a new contract it has tentatively struck with its pilots union will reduce full-year profit by 20 cents per share.

Excluding that cost, FedEx raised its outlook for fiscal 2007. For the quarter ended Aug. 31, the company reported net income of $475 million, or $1.53 per share, versus a prior-year profit of $339 million, or $1.10 per share. Revenue rose 11% to $8.54 billion from $7.71 billion in the year-earlier period.

Wall Street had forecast a profit of $1.52 per share, the average estimate of 15 analysts surveyed by Thomson Financial, on projected sales of $8.39 billion.

Total combined average daily package volume at FedEx Express and FedEx Ground increased 5% over the year-earlier period.

FedEx forecast earnings of $1.45 to $1.60 per share for the second quarter, and between $6.30 to $6.65 per share for the full year.

The guidance includes expected charges related to the labor contract, which if ratified, will reduce second-quarter and full-year earnings by about 20 cents per share due to signing bonuses and other upfront compensation.