UPDATE 1-FedEx posts profit; express shipping rates will rise next year
Sept 18 (Reuters) - FedEx Corp posted a better-than-expected quarterly profit on cost cuts and said it would raise rates next year for express shipping, a business that has suffered as customers shift to slower but cheaper delivery options.
The company, considered an economic bellwether because of the massive volume of goods it moves around the world, said on Wednesday it earned $489 million, or $1.53 a share for its first quarter that ended Aug. 31.
FedEx also backed its profit view for the year, sending its shares up 3 percent in premarket trading.
FedEx said express shipping rates would increase an average 3.9 percent for U.S. domestic and international services, effective Jan. 6. Rate increases for its ground courier facilities will be announced later this year, the company said.
Memphis, Tennessee-based FedEx beat Wall Street profit estimates by 3 cents on cost cuts and other price increases it implemented earlier.
FedEx has also retired older, less efficient airplanes. The company said modernization of its fleet reduced maintenance costs in the first quarter. Revenue at its express unit fell, but operating margins rose to 3.6 percent from 3.1 percent the previous year.
Revenue at its lower-margin ground segment rose 11 percent, but operating margins were at 17.1 percent, down from 18.1 percent last year.
The company's shares were trading at $113.75 before the markets opened, after closing at $110.67 Tuesday on the New York Stock Exchange.