FedEx profit soars with pandemic-fueled delivery demand

·2 min read
A Federal Express truck is shown in Los Angeles, California

(Reuters) - U.S. delivery firm FedEx Corp on Thursday 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.

On Thursday they jumped 4% 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% 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% 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% to 13.2 million during the quarter. Revenue per package increased 11% 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.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Chris Reese, Hugh Lawson and David Gregorio)