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Memphis News & Weather | Memphis, TN | WATN - localmemphis.com

FedEx's profit nearly triples as online shopping grows during COVID-19 pandemic

CEO Fred Smith calls the delivery of COVID-19 vaccines “the most important work in the history of FedEx.”

MEMPHIS, Tennessee — FedEx says its profit nearly tripled in its most recent quarter, despite winter weather that hobbled some of its facilities. Online shopping has surged during the pandemic as more people avoid going inside stores. That has made package delivery companies like FedEx in high demand.

FedEx, which is based in Memphis, reported net income of $892 million for the three months ending Feb. 28, compared with $315 million in the same period the year before. Adjusted earnings came to $3.47 per share, beating Wall Street expectations. The company said revenue rose 23% to $21.5 billion, also beating expectations.

NEWS RELEASE FROM FEDEX:

“I’m exceedingly proud of our FedEx team members, who are moving the world forward through the delivery of COVID-19 vaccines — the most important work in the history of FedEx,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “As reflected in this quarter’s results, continued execution of our strategies is producing strong earnings growth and margin improvement across our company. We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future.”

Operating results increased primarily due to strong volume growth in U.S. domestic residential package and FedEx International Priority services and pricing initiatives across all transportation segments. These factors were partially offset by costs to support strong demand and expand services, variable compensation expense, higher labor rates, and one fewer operating weekday.

Severe winter weather during February reduced the quarter’s operating income by an estimated $350 million. The weather significantly impaired operations at several of the company’s largest facilities, including the primary FedEx Express hub in Memphis and FedEx Express hubs in Indianapolis and North Texas.

Net income includes tax benefits of $108 million ($0.40 per diluted share) from a tax rate increase in the Netherlands applied to deferred tax balances and associated with voluntary contributions to the company’s pension plans.