FedEx Corp. (FDX, Financial) released its fourth-quarter 2020 results on June 30 after the market closed. The logistics giant posted an earnings and revenue beat owing to an increase in domestic deliveries in the wake of the pandemic.
Shares surged 9.4% to $153.3 in after-hours trading on Tuesday.
By the numbers
The Memphis, Tennessee-based company posted adjusted earnings of $2.53, which were down from $5.01 in the prior-year quarter. Revenue for the same period came in at $17.4 billion, down from $17.8 billion reported last year. Analysts had anticipated earnings of $1.52 per share on $16.5 billion in revenue.
“Though our fiscal fourth quarter performance was severely affected by the Covid-19 pandemic, I am extremely proud of the herculean efforts of our team members,” Chairman and CEO Frederick W. Smith said. “With safety as the first priority, these men and women provided essential transportation of critical supplies across the globe and delivered peak-level e-commerce volumes in the United States. As a result of the strategic investments we have made to enhance our capabilities and efficiencies, FedEx is well positioned to support and benefit from the reopening of the global economy.”
Residential shipments increase while business-to-business shipments decline
The coronavirus pandemic and the resulting lockdowns forced customers to stay at home and shop online, which is why resident shipments surged during the quarter. However, business-to-consumer shipments are less lucrative for FedEx when compared with business-to-business shipments, which involves comparatively less miles per route and more packages per stop.
Currently, the courier company is focusing on reducing costs associated with residential delivery. Meanwhile, business-to-business volume has started showing signs of recovery.
FedEx Ground and Express performance
FedEx Ground revenue stood at $6.4 billion for the quarter, which was an improvement from $5.3 billion in the prior-year quarter. The revenue growth was attributable to a rise in online orders on account of the pandemic. In addition, ground’s average daily package volume amounted to 11.1 million, which exceeded the 8.8 million reported last year. In spite of these tailwinds, operating income fell from $810 million a year ago to $673 million.
FedEx Express, which handles more commercial deliveries, saw revenue decline 10% to $8.6 billion. Likewise, operating income dipped 56% to $338 million in the reported quarter. Average daily package volume was 5.4 million as compared to 6.2 million reported last year. On a positive note, the segment’s air shipping services is witnessing increased demand, especially for international shipments.
Guidance
FedEx pulled its financial forecast for fiscal 2021, citing the global uncertainty caused by the coronavirus pandemic.The company, however, foresees capital spending of roughly $4.9 million for fiscal 2021.
Disclosure: I do not hold any positions in the stocks mentioned.
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