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The global surge in e-commerce brought on by the coronavirus pandemic combined with online holiday shopping sent net quarterly sales for FedEx Corp. above $20 billion for the first time in its history, and led to an increase in net income as well, the company reported Dec. 17.
For its fiscal 2021 second quarter, Memphis, Tenn.-based FedEx said net sales rose 19% to $20.5 billion from $17.3 billion in the same period a year ago.
The company’s fiscal Q2 earnings more than doubled to $1.23 billion, or $4.55 a share, compared with $560 million, or $2.13 a share, a year ago. The results exceeded Wall Street expectations. Investment firm UBS expected earnings per share of $4.20, and Zacks Consensus Estimate said it was expecting a result of $3.90 per share.
“My sincere appreciation goes out to our nearly 600,000 team members around the world who go above and beyond to keep the world moving during this ongoing pandemic and unprecedented peak season,” FedEx CEO Fred Smith said. “Our strong revenue and earnings growth during the quarter is a reflection of their continued hard work and commitment to our customers.”
Smith added, “These results demonstrate the unparalleled strength of our global express network, the breadth of our e-commerce capabilities and the dedication of our people.”
Broken down by business segment, revenue for FedEx Express rose 12% to $10.36 billion, compared with $9.08 billion in Q2 2019. The unit’s operating income rose a whopping 281% to $900 million from $236 million in Q2 of the last fiscal year.
FedEx Ground Q2 revenue jumped by 28% year-over-year to $7.34 billion, compared with $5.315 billion. Operating income also increased 61% to $552 million from $342 million.
Revenue for FedEx Freight, the company’s less-than-truckload division, increased 5% to $1.93 billion from $1.84 billion last year. Operating income for the freight segment increased 79% to $252 million from $141 million in 2019.
Company leaders during a Dec. 17 conference call said the business sector is helping to lift U.S. spending to pre-pandemic levels.
“We’re also seeing growth beyond the consumer as drivers of business activity are increasingly in place,” FedEx Executive Vice President for Marketing Brie Carere said. “Inventory restocking and a strong recovery in capital goods spending are supporting industrial production.”
She added, “Positive developments on the vaccine front should strengthen the appetite for investment. However, the service sector does remain challenged and faces short-term uncertainty against the latest virus surge. When the health emergency ends and pent-up services demand is released, we should see a long growth runway.”
Saluting the men and women of the trucking industry who kept America's essential goods flowing during the coronavirus pandemic.
She noted that this year saw a huge shift in online versus in-person spending. “In the first nine months of 2020, U.S. e-commerce sales grew 33% year-over-year while traditional retail sales excluding auto, gas, food service, and goods services grew a little more than 1% year-over-year,” she said.
Carere said package volumes from online purchases are expected to more than triple to 111 million a day by 2026, up from 35 million in 2019.
Along with Atlanta-based UPS, FedEx is playing a key role in the effort to deliver the COVID-19 vaccine to all 50 states and around the world. In the U.S., FedEx is managing deliveries in the West, while UPS is handling parts of the Midwest and East Coast.
“As we handle these record volumes, we’re also delivering the first wave of COVID-19 vaccine shipments here in the U.S. In fact, on December the 14th at 5:53 a.m. Eastern, the FedEx Express courier made the first U.S. vaccine delivery to Boston Medical Center in Boston,” FedEx President and Chief Operating Officer Raj Subramaniam said. He noted that the effort to vaccinate hundreds of millions of people is possibly the most important effort in FedEx’s 50-year history.
“Our team stands ready to transport additional vaccine shipments internationally as they become available,” Subramaniam said. “This effort is among the most important work in the history of our company. And we are honored and proud to be a part of effort to help end this pandemic.”
FedEx is not providing an earnings forecast for fiscal 2021. Its capital spending forecast for the year remains $5.1 billion.
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