By Ezequiel Minaya 

Package delivery giant FedEx Corp. saw operating margins slide in its latest quarter, offsetting gains on expanding volumes tied to an e-commerce boom.

Operating margin for the quarter ended Nov. 30 retreated to 7.8% from 9.1% during the same period a year earlier. Acquisition costs linked to the takeover of TNT Express NV in May, among other items, hurt earnings at the Memphis, Tenn., company.

FedEx posted profit on an adjusted basis of $2.80 per share for its second quarter, up from $2.58 a year earlier but below a forecast of $2.90 by analysts surveyed by Thomson Reuters.

Shares of the company, up 35% over the past 12 months, fell 2.7% after-hours to $193.49.

Analysts are eager to gauge how FedEx and other carriers handle the surprise surge in holiday shipping volumes. The increase means better revenue for the holiday quarter but creates pressure on FedEx and other rivals to keep pace.

"In the current peak shipping season, reports suggest that both FedEx and UPS are struggling to keep up with demand," said analysts at Cowen and Company in a recent client note. "As e-commerce continues to grow, there will be plenty of packages for FedEx, UPS and USPS to grow their businesses."

Revenue for the latest quarter rose 19.2% to $14.9 billion, thanks in part to the new addition of TNT Express. FedEx bought the company for nearly $5 billion. Analysts had expected $14.92 billion.

For the November quarter, FedEx reported a profit of $700 million, or $2.59 a share, up from $691 million, or $2.44 a share, a year ago.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

 

(END) Dow Jones Newswires

December 20, 2016 17:19 ET (22:19 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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