A FedEx worker unloads packages from his delivery truck in Washington, DC on March 31, 2020.
Drew Angerer | Getty Images News
American express company FedEx (FedEx) on Tuesday announced a higher-than-expected quarterly profit after higher prices, lower fuel costs and improved efficiency offset the negative impact of e-commerce shipments driven by the pandemic.
The shares of the Memphis-based company rose 7.6% in extended trading to $254.66.
In the first fiscal quarter ended August 31
Covid-19 disrupted the operations of FedEx and rival United Parcel Service. The lucrative delivery of companies has dried up. As workers shelter at home and place orders online, more and more online orders from office furniture and fitness equipment to snacks and pet food have increased the number of high-cost residential deliveries.
Traditionally, home delivery is more costly because they involve fewer packages and have farther stops. Increased numbers and investments in automated sorting centers and route optimization are reducing these costs.
Edward Jones analyst Matt Arnold said: “As long as so many packages are transferred every day, small improvements can bring about big changes. The greatest pressure on profitability may come from the company.”
FedEx spent $565 million on fuel for the entire company this quarter, a decrease of 35% from the same period last year.
Refinitiv’s data shows that FedEx did not provide a profit forecast for the 2021 fiscal year, but still stated that it expects annual capital expenditures of $5.1 billion, higher than the average analyst estimate of $4.96 billion.
FedEx’s adjusted net income in the first quarter increased by 60% to $1.28 billion, or $4.87 per share.
Revenue increased by 13.5% to $19.3 billion.
Analysts on average expect the company to earn $2.69 per share and revenue of $17.55 billion.