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FedEx earnings beat estimates on ‘unprecedented’ holiday shipping season

CEO Fred Smith said the logistics giant expects demand for its “e-commerce and international express solutions to remain very high for the foreseeable future.”

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Boxes containing the Moderna COVID-19 vaccine are prepared to be shipped at the McKesson distribution center in Olive Branch, Mississippi, U.S. December 20, 2020.

Paul Sancya | Reuters

FedEx on Thursday reported better-than-expected profits and revenues in its most recent quarter after what its CFO called an “unprecedented” peak holiday shipping season, despite severe weather in February that impaired operations at several of its largest hubs.

FedEx shares jumped roughly 3% in after-hours trading Thursday.

Here’s how FedEx did compared with what investors are expecting for the fiscal third quarter 2021, ending Feb. 28, based on estimates compiled by Refinitiv:

  • Adjusted EPS: $3.47 per share vs. $3.23 expected.
  • Revenue: $21.51 billion vs. $19.97 billion expected.

Revenue rose 23% from $17.49 billion during the same quarter last year. The company said the increase was due to “strong volume growth” in its domestic residential package delivery business and international shipping services.

CEO Fred Smith said in a statement that the company expects “demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future.”

FedEx reported net income of $939 million, or $3.47 per share, compared with $371 million, or $1.41 per share, during the same quarter a year ago.

However, severe weather in February that hit several of the company’s operating hubs, including its primary FedEx Express hub in Memphis, Tennessee, cut its operating income by roughly $350 million, the company said.

FedEx Chief Financial Officer Michael Lenz said the improvement in the company’s third-quarter results reflects the “momentum in our business which continued through an unprecedented peak season.”

The Memphis-based logistics giant has become a key component in the U.S.’ Covid-19 vaccine distribution efforts, alongside rival UPS. Smith called the effort “the most important work in the history of FedEx.”

FedEx said in early March that it started shipping the third authorized vaccine, from Johnson & Johnson, and expects a “significant uptick” in volume in the coming months.

“As manufacturers obtain approval to ship COVID-19 vaccines with greater temperature ranges and varying dosing allotments, we anticipate more of these packages moving to more places through our global network,” FedEx Express CEO Don Colleran said in a March 1 statement.

Find the full press release from FedEx here.

Correction: This story has been updated to reflect the latest EPS and revenue estimates for FedEx, as forecast by Refinitiv consensus estimates.

Source: https://www.cnbc.com/2021/03/18/fedex-fdx-q3-2021-earnings-.html

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