FedEx's profit soar as online shopping grows
Friday, 19 March 2021
US delivery firm FedEx Corp has said quarterly profit jumped more than expected on higher prices and surging volume from pandemic-fueled e-commerce deliveries during the holiday shipping season.
FedEx shares have more than doubled in price since a year ago, when the pandemic forced government officials to shutter businesses and issue stay-at-home orders, reports Reuters.
On Thursday they jumped 4.0 per cent to $274 in extended trading after founder and Chief Executive Frederick Smith said he expected demand for e-commerce and international express services to “remain very high for the foreseeable future.”
Fiscal third-quarter adjusted net income at the Memphis-based company soared 153 per cent from a year earlier to $939 million, or $3.47 per share, beating analyst expectations of $3.23 per share, according to Refinitiv data.
Revenue for the quarter ended Feb. 28 grew 23 per cent to $21.5 billion, boosted by a half billion holiday package deliveries and COVID-19 vaccines shipments.
The results came even as severe winter weather in February disrupted service at important facilities in Memphis, Indianapolis and North Texas, and reduced quarterly operating income by about $350 million.
FedEx and rival United Parcel Service hiked prices to shelter profits after the pandemic hammered high-margin shipments between businesses and unleashed a flood of deliveries of online orders, including bulky items like exercise bikes and sofas.
Average daily package volume for FedEx Ground, which counts Walmart among its top e-commerce shipping partners, jumped 25 per cent to 13.2 million during the quarter. Revenue per package increased 11 per cent to $9.72.
The company forecast full-year adjusted earnings per share of $17.60 to $18.20, assuming margin gains in all of its business segments. That outlook was better than Wall Street’s average target of $17.40, according to Refinitiv.
Looking ahead, marketing chief Brie Carere said e-commerce volume could soften for a short time as COVID-19 vaccinated shoppers return to stores.
“However, we are very confident that e-commerce as a percentage of retail has a long growth runway,” Carere said on a web cast.