- Shares of FedEx rose 6% after it announced strong profits and revenues for the fiscal third quarter of 2020.
- FedEx said the increased volume of packages offset its higher labor costs and weather-related expenses during the quarter ending in February.
- Its CEO said, "We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future.
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Shares of FedEx rose as much as 7% on Friday after the delivery-services company announced strong profits and revenues for the fiscal third quarter of 2020. The beats were driven by an "unprecedented" surge during the holiday season as the US economy slowly recovered from the pandemic.
The company said the increased volume of packages driven by e-commerce offset its higher labor costs and weather-related expenses, which affected many of its hubs, during the quarter ending in February.
The company posted an adjusted EPS of $3.47 per share versus the $3.23 expected by analysts at Refinitiv, while net income tripled to $939 million versus $371 million in the same period last year. Revenue also beat estimates, rising 23% to $21.51 billion versus the expected $19.97 billion.
"We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future," CEO Fred Smith said in a statement.
The winter storms in February cut the company's operating income by around $350 million. This included the company's largest hub in Memphis, Tennessee, and FedEx Express hubs in Indianapolis and North Texas. Still, the company was able to recover thanks to the strong e-commerce demand as well as the decreased competition for air-freight, allowing the company to raise prices.
FedEx, alongside rival United Parcel Service, has also benefited from the online shopping boom brought about by the pandemic as large swathes of the economy shut down prompting more people to stay at home. Executives of the company said they expect this trend to continue even after the economy slowly opens up and a steady vaccine rollout.
Apart from this, FedEx also said it is committed to continue delivering COVID-19 vaccines-related ingredients and supplies throughout the U.S., Canada, and more than 20 other countries around the world. The company said it is also prepared to transport vaccines to more than 220 countries and territories.
Looking ahead, the company expects EPS of $17.60 to $18.20, excluding adjustments for its retirement plan and debt refinancing, restructuring, and deal costs for the final months of its fiscal year ending in May - higher than Wall Street's $17.56 a share estimates.