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FedEx Corp. quarterly earnings it almost tripled and revenue increased 23%, despite winter storms in the United States that interrupted its delivery operations and undermined its profit by $ 350 million.
The package giant, like rival United Parcel Service Inc., has been dealing with a sudden spike in e-commerce orders during the COVID-19 pandemic, as more people buy from home. Executives said on Thursday that they expect the trend to persist even with the launch of vaccines.
“We expect demand for our unparalleled international e-commerce and express solutions to remain very high for the foreseeable future,” Chief Executive Fred Smith said in a statement.
FEDEX IS READY FOR ADDITIONAL DISTRIBUTION OF THE COVID-19 VACCINE
In the quarter ended February 28, FedEx package volumes increased 25% at its Ground unit, which handles most of its e-commerce deliveries and most of its Christmas shopping orders. The company recorded a 29% increase in volumes at the Ground unit during the quarter ended November 30.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| FDX | FEDEX CORP. | 264.36 | -1.29 | -0.49% |
| UPS | UNITED PARCEL SERVICE, INC. | 160.20 | -0.58 | -0.36% |
For the Expresso business, which handles overnight and international shipments, the volume of daily packages grew 12.2% in the quarter. The average revenue per package for the Express business was US $ 19.21, compared to US $ 9.72 for the Land unit.
FedEx struggled with significant delays for weeks after February’s winter storms froze many parts of the country, including its main Memphis screening center, Tenn. FedEx said it added changes to catch up, but customers said the delays persisted.
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To manage the demand fueled by the pandemic, FedEx and UPS have been raising prices, applying volume limits and adding surcharges. UPS counts Amazon.com Inc. among its largest customers, while FedEx severed relations with Amazon in 2019 and focused on serving its competitors as Target Corp. and Walmart Inc.
FedEx benefited from lower jet fuel prices last year, but that cost went up in the last quarter, when it paid $ 1.54 per gallon, compared to $ 1.22 in the previous quarter. In the previous year’s quarter, that cost was about $ 2 a gallon.
Overall, FedEx’s net profit almost tripled over the previous year, to $ 892 million. Quarterly revenue in the third fiscal quarter reached $ 21.5 billion, up from $ 17.5 billion in the same period last year. The results were above Wall Street expectations, which expected about $ 20 billion in quarterly revenue, according to FactSet.
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FedEx also released a financial forecast for the final months of its fiscal year, which ends in May.
The company expects earnings per share of $ 17.60 to $ 18.20, excluding adjustments to its retirement plan and debt refinancing, restructuring and business costs. Wall Street expects adjusted earnings of around $ 17.56 per share.