FedEx earnings jump on higher shipment volumes

CNBC With Reuters
FedEx better positioned than UPS: Analyst

FedEx reported a 24 percent rise in quarterly profit as the world's No. 2 package delivery company benefited from higher volumes in both its express and ground businesses.

After the earnings announcement, the company's shares rose in pre-market trading. (Get the latest quote here.)

The company posted first-quarter earnings of $2.10 per share, up from $1.53 a share in the year-earlier period.

Revenue increased to $11.7 billion from $11.02 billion a year ago.

Adam Jeffery | CNBC

Analysts had expected the company to report earnings of $1.96 a share on $11.48 billion in revenue, according to a consensus estimate from Thomson Reuters.

"This was still a very strong performance across all three of the company's transportation segments. They beat us on operating profit in the express business, ground and freight," Christian Wetherbee, a transportation analyst at Citigroup, said on "Squawk on the Street." "The fundamentals of the business are getting better and some of their cost improvement initiatives are definitely bearing fruit at this point."

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The company recently won approval to expand its business in China, along with competitor United Parcel Service, according to Reuters. A 2009 law had restricted the ability of foreign couriers to delivery packages from abroad to Chinese consumers, and both companies had to reapply for several of its licenses there. But the two companies face stiff competition from local rivals—the German courier service DHL already pulled its business out of China.

The courier service is also battling a recent criminal indictment claiming FedEx knowingly did business with online pharmacies fulfilling invalid prescriptions, according to Reuters. The company could face fines costing up to $1.6 billion. FedEx pleaded not guilty and says it is innocent of the charges.

—By CNBC. Reuters contributed to this report.