FedEx Earnings Jump in 4Q
FedEx Corp. topped expectations for its latest quarter after a surge in online shopping during the crucial holiday period drove results in its ground segment. The company also lifted the low-end of its earning forecast for its business year ending in May and said it expects momentum to carry into the new year. Shares of FedEx gained 4.8% to $151.25 in after-hours trading. The Memphis-based company in December had reported "unforeseen volume" and said severe weather that struck some parts of the country resulted in widespread delays. Wednesday, Chief Executive Frederick Smith credited the better-than-expected quarter on increased demand—driven by e-commerce—and peak-season efforts by staff, some of whom worked extra shifts on Christmas day to ensure deliveries. The company has been working to benefit from consumers' shift to online shopping and last year bought Dutch package-delivery company TNT Express NV for $4.8 billion in a move to grab a chunk of the European e-commerce market. Rival United Parcel Service Inc. similarly benefited from higher holiday volume, last month reporting earnings that nearly tripled from a year earlier—also despite a wave of disruptions stemming from the volume surge. For FedEx, the ground segment powered results. Revenue there jumped 30% to $4.41 billion. The company's express unit, meanwhile, saw sales slip 1% to $6.56 billion on the back of lower volume and lower surcharges. In all, FedEx reported a profit of $507 million, or $1.84 a shares, down from $628 million, or $2.18 a share, a year earlier. Excluding legal fees and acquisition costs, among other items, per-share profit rose to $2.51 from $2.03. Revenue rose 8.5% to $12.7 billion. Analysts projected $2.34 in adjusted earnings per share and $12.38 billion in revenue, according to Thomson Reuters. The company said it now expects to earn an adjusted $10.70 to $10.90 a share this year, versus earlier guidance of $10.40 to $10.90. Analysts have been looking for $10.56 in earnings per share. "Our positive financial momentum should continue into our upcoming fiscal 2017, where we expect solid growth in earnings and cash flow," said Alan B. Graf Jr., FedEx's chief financial officer.