Shares of FedEx surged more than 8 percent in after-hours trading following the company reporting better than expected revenue and adjusted profit despite a $334 million loss in the fiscal fourth quarter.
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The company earned an adjusted net income of $663 million, or $2.53 a share, compared with $1.32 billion, or $5.01 a share, a year ago while sales fell slightly to $17.4 billion from $17.8 billion a year ago.
Analysts polled by FactSet had expected adjusted earnings of $1.58 a share on sales of $16.4 billion.
“Virtually all revenue and expense line items were affected by the Covid-19 pandemic during the quarter,” the company said in a statement. “While commercial volumes were down significantly due to business closures across the globe, there were surges in residential deliveries at FedEx Ground and in trans-pacific and charter flights at FedEx Express, which required incremental costs to serve.”
FedEx said its 20 percent bump in revenue for its ground unit was the result of an increase in online shopping that came from the coronavirus pandemic to help offset a slowdown in its commercial deliveries.
In order to keep up with surge in demand, FedEx tacked on a new surcharge of 30 cents on certain packages, including shipping for oversized items.
As for its commercial deliveries, FedEx's core express delivery fell 10 percent and operating income tumbled 56 percent as businesses across the United States temporarily or permanently shut down, according to the Associated Press.
The fourth-quarter loss came out to $1.28 per share, but FedEx noted that adjusting the results to exclude write-downs from the temporary closures of its office store locations and an accounting loss for the changing value of retirement-plan investments result in the company earning $2.53 per share.
Still, the results beat the expected average forecast of $1.42 per share among nine analysts surveyed by Zacks Investment Research.
FedEx also said that it incurred about $125 million in costs for protective gear and extra cleaning services due to the pandemic.
FedEx did not offer a prediction about earnings for fiscal year 2021, which began June 1, saying the "timing and pace of an economic recovery are uncertain." For the 2020 fiscal year, FedEx reported profit of $1.29 billion on revenue of $69.22 billion.
The company plans to cut capital spending by $1 billion to $4.9 billion in the new fiscal year.
The Associated Press contributed to this report