FedEx Corp. (FDX, Financial) released its fiscal first-quarter 2021 results on Sept. 15 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 7.6% to $254.66 in after-hours trading on Tuesday following the results.
By the numbers
The Memphis, Tennessee-based company posted adjusted earnings per share of $4.87, which were up from $3.05 in the prior-year quarter. Revenue for the same period came in at $19.3 billion, up from $17 billion reported last year. Analysts had anticipated earnings of $2.69 per share on $17.55 billion in revenue.
Chairman and CEO Frederick W. Smith commented the following:
"Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies. I would like to thank our team members whose efforts during this time have helped keep the world's health care, industrial and at-home supply chains moving despite the challenges of the global pandemic."
Residential shipments rise while business-to-business shipments decline
The coronavirus pandemic and the resulting lockdowns resulted in customers staying at home and shopping online more often, 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 involve comparatively less miles per route and more packages per stop.
Currently, the courier company is focusing on reducing costs associated with residential delivery. The company is making investments in automated sorting centers and route optimization to counter higher-cost residential delivery.
FedEx Ground and Express performance
FedEx Ground revenue stood at $7 billion for the quarter, which was an improvement from $5.2 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 11.6 million, which exceeded the 8.8 million reported last year. Thanks to these tailwinds, operating income rose from $644 million a year ago to $834 million.
FedEx Express, which handles more commercial deliveries, saw revenue increase to $9.6 billion from $8.9 billion reported last year. Likewise, operating income surged roughly 150% to $710 million in the reported quarter. Average daily package volume inched up 5% on a year-over-year basis. The segment's air shipping services is witnessing increased demand, especially for international shipments.
Guidance
FedEx pulled its financial forecast for fiscal 2021. The company foresees capital spending of roughly $5.1 billion for fiscal 2021, up from its previous guidance of $4.9 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
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