FedEx

  • FedEx   reported better-than-expected results after a bumper holiday shipping season.   That was in spite of inclement weather affecting several operations during   the period, and the rollout of vaccines allowing shoppers to venture out into   public retail spaces again.

  • Revenue gained 23% to $21.50 billion in the year-ago quarter thanks   to strong volume growth in the domestic residential package delivery business   and international shipping services divisions.

  • Poor weather conditions in February cost the company $350 million in   operating income. This was after hubs, including its primary FedEx Express   hub in Memphis, Tennessee, and hubs in Indianapolis and North Texas were   affected. Adjusted Operating income increased 119.5% to $1.06 billion, with   the operating margin at 4.7%. Operating results improved primarily due to   strong volume growth in US domestic residential packaging, FedEx   International Priority services, as well as pricing initiatives across all   transportation segments. These factors were partially offset by costs to support   stronger demand and expand services, bonuses, higher labour costs, and one   less operating weekday in the period.

  • FedEx saw adjusted net income jump a remarkable 153% to $939   million, or $3.47 per share, from the same quarter a year ago. The company said   the profits and revenue were unprecedented and expects demand for e-commerce   and international express solutions to remain very high for the foreseeable   future. This bodes well for the logistics operator which has seen demand   buoyed by stay-at-home orders during the pandemic crisis.

  • Fedex also looks set to benefit from the vaccine rollout, as a key   player in the vaccine distribution efforts. It has already begun delivering   the Johnson & Johnson vaccine, and expects a significant uptick in volume   in the coming months. It is also gearing-up to ship other Covid-19 vaccines   globally, as other manufacturers receive approvals for medicines which have   greater temperature ranges and varying dosages.

  • Cash and cash equivalents jumped 81.44% to $8.85 billion at the end   of the fiscal third quarter. The delivery giant is forecasting earnings of   $16.80 to $17.40 per diluted share before the fiscal 2021 year-end. Capital   spending estimates, of $5.7 billion, are up from the prior forecast due to   changes in the timing of aircraft payments and the acceleration of FedEx   Ground capacity expansion initiatives.

  • Fedex is an exceptionally well-run business which has benefitted tremendously from Covid-19 tailwinds. The business is highly specialized with thin margins, and faces tough competition. We are holders of Amazon.com instead in the Cratos BCI worldwide Equity Fund.

FedEx