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FedEx Freight | Revenue Growth, Cost Controls Lift FedEx Q4 Profit; Guides Q1 ...

FedEx Freight Segment
For the fourth quarter, the FedEx Freight segment operating profit increased 49% to $142 million on 15% revenue growth, which totaled $973 million. Operating margin was 14.6%, up from 11.3% the previous year. The growth in Less-than-truckload (LTL | charts | news | PowerRating) yield and shipments, combined with effective cost controls, led to an increase in operating margin.
For the segment, LTL yield rose 9%, reflecting incremental fuel surcharges and higher rates. FedEx Freight implemented a 5.95% general rate increase effective April 24, 2006. Average daily LTL shipments increased 8% due to greater demand for FedEx Freight's regional and interregional services.
On May 26, FedEx agreed to acquire the less-than-truckload operations of Watkins Motor Lines and certain affiliates for $780 million in cash. The transaction is expected to close during the first quarter of fiscal 2007.
This acquisition would extend FedEx's leadership position to a new sector of the freight industry. FedEx Freight and Watkins would form the industry's most well-rounded LTL transportation solution, providing customers with an unmatched suite of freight solutions under one brand.
 
FedEx Freight and Watkins would form the industry's most well-rounded LTL transportation solution, providing customers with an unmatched suite of freight solutions under one brand.
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