FedEx Corp.’s profit rose last quarter on increased prices and e-commerce deliveries and the company signaled strong momentum for the full year as the U.S. economy recovers from the pandemic.
Adjusted earnings for the quarter came to US$3.47 a share, beating analysts’ expectations of US$3.22, FedEx said in a statement Thursday.
The company said surging package volumes and higher prices offset higher-than-expected expenses from labor costs and poor weather during the quarter. Winter storms cut operating income by US$350 million after severe snowfall locked up most of the southern U.S., including FedEx’s largest hub in Memphis, Tennessee, for about a week in mid-February.
Sales climbed 23 per cent to US$21.5 billion from a year earlier but operating margins of 4.9 per cent fell short of analyst expectations of 5.9 per cent. Margins had tumbled to 2.8 per cent last year as COVID-19 began to initially spread.
Express sales rose 21 per cent to US$10.8 billion and Ground revenue jumped 37 per cent to about US$8 billion.
FedEx provided a bullish forecast for the full year, the first guidance it has issued since suspending its outlook 12 months ago amid uncertainty about the pandemic. It projected per-share earnings for the year ending May 31 of US$17.60 to US$18.20, which is higher than analysts’ estimates of US$17.40.
“We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future,” Chief Executive Officer Fred Smith said in a statement.
Shares rose 2.8 per cent in after-hours trading in New York. FedEx has climbed 2.4 per cent this year through Wednesday, trailing a 5.8 per cent gain for the Standard & Poor’s 500 Index. Investors have pulled back after a 72 per cent gain for the stock last year.
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