FedEx shares soar almost 9per cent as quarterly results top expectations

FedEx shares soar almost 9per cent as quarterly results top expectations

U.S. package delivery company FedEx Corp said it would not issue a 2021 forecast after its fiscal fourth quarter adjusted profit tumbled amid a deadly pandemic that is upending lives and commerce around the globe.

A Federal Express truck on delivery is pictured in downtown Los Angeles
FILE PHOTO: A Federal Express truck on delivery is pictured in downtown Los Angeles, California October 29, 2014. REUTERS/Mike Blake

LOS ANGELES: Shares of FedEx Corp jumped 8.5per cent in extended trading on Tuesday after a surge in pandemic-fueled home deliveries helped the U.S. package carrier post better-than-expected quarterly profit and revenue.

Adjusted profit at Memphis-based FedEx fell by almost 50per cent to US$663 million, or US$2.53 per share, for the quarter ended May 31. Revenue slipped to US$17.4 billion from US$17.8 billion a year earlier.

Analysts, on average, expected a profit of US$1.52 per share on revenue of US$16.4 billion, according to Refinitiv IBES data.

FedEx said the novel coronavirus pandemic hit virtually all of the company's revenue and expense line items. Executives declined to provide an earnings forecast for fiscal 2020, citing the uncertain timing and pace of an economic recovery.

FedEx is grappling with a flood of coronavirus-related e-commerce shipments as it rebuilds from its split with Amazon.com Inc , a major customer, and the costly integration of TNT Express in Europe.

Business closures and the profound shift to online shopping are squeezing profits at FedEx and rival United Parcel Service Inc . Residential e-commerce deliveries are less lucrative than business deliveries because they involve far-flung addresses and fewer packages per stop.

FedEx executives said they are beginning to see a recovery in business-to-business shipments as they attack residential delivery costs.

FedEx Ground, which handles more e-commerce home deliveries, reported a 20per cent revenue increase for the quarter and a 17per cent drop in operating income.

Revenue at FedEx Express, which skews toward commercial deliveries, fell 10per cent and operating income dropped 56per cent.

Total domestic package volume fell 9per cent for the quarter.

FedEx shares, which hit a record high of almost US$250 in October 2017, were up US$11.90 at US$152.00 in after-hours trading on Tuesday.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Chris Reese and Leslie Adler)

Source: Reuters

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