FedEx Corp.'s quarterly profit nearly tripled and revenue jumped 23%, despite winter storms in the U.S. that disrupted its delivery operations and sapped its profit by $350 million.
The package giant, like rival United Parcel Service Inc., has been handling a surge in e-commerce orders during the COVID-19 pandemic as more people shop from home. Executives said Thursday they expected that trend to persist even as vaccines roll out.
"We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future," Chief Executive Fred Smith said in a statement.
In the quarter ended Feb. 28, FedEx's package volumes rose 25% in its Ground unit, which handles most of its e-commerce deliveries and the bulk of its holiday shopping orders. The company logged a 29% surge in volumes in the Ground unit during the quarter ended Nov. 30.
|UPS||UNITED PARCEL SERVICE, INC.||179.68||+0.03||+0.02%|
For the Express business, which handles overnight and international shipments, daily package volume rose 12.2% in the quarter. Average revenue per package for the Express business was $19.21, compared with $9.72 for the Ground unit.
FedEx struggled with significant delays for weeks after February winter storms sent many parts of the country into a deep freeze, including its major sorting hub in Memphis, Tenn. FedEx said it added shifts to catch up with the backlog, but customers said delays persisted.
To manage the pandemic-fueled demand, both FedEx and UPS have been raising prices, enforcing volume limits and adding surcharges. UPS counts Amazon.com Inc. among its biggest customers, while FedEx broke ties with Amazon in 2019 and has focused on serving its competitors like Target Corp. and Walmart Inc.
FedEx benefited from lower jet fuel prices over the past year, but that cost crept up in the latest quarter when it paid $1.54 a gallon, up from $1.22 in the previous quarter. In the year-ago quarter, that cost was about $2 a gallon.
Overall, FedEx's net income nearly tripled from a year ago to $892 million. Quarterly revenue in the fiscal third quarter reached $21.5 billion, up from $17.5 billion in the same period a year ago. The results were above Wall Street's expectations, which were looking for about $20 billion in quarterly revenue, according to FactSet.
FedEx also issued a financial forecast for the final months of its fiscal year, which ends in May.
The company expects per-share earnings of $17.60 to $18.20, excluding adjustments for its retirement plan and debt refinancing, restructuring and deal costs. Wall Street is expecting adjusted profit of around $17.56 a share.