FedEx Corp. shares rose Tuesday night after the logistics and delivery company reported better-than-expected adjusted earnings and sales in its fiscal fourth quarter as rising online shopping amid the pandemic coronavirus compensated for higher costs and thinner margins.
FedEx FDX,
reported a loss of $ 334 million, or $ 1.28 per share, in the quarter, compared to a loss of $ 1.97 billion, or $ 7.56 per share, in the prior-year quarter. Adjusted for one-off items, the company earned $ 663 million, or $ 2.53 per share, compared to adjusted earnings of $ 5.01 a year ago.
Sales fell slightly to $ 17.4 billion from $ 17.8 billion a year ago.
Analysts surveyed by FactSet expected FedEx to report adjusted earnings of $ 1.58 per share on sales of $ 16.4 billion.
The quarter was “severely affected” by the COVID-19 pandemic, Chief Executive Frederick W. Smith said in a statement.
Thanks to the “Herculean efforts” of employees and the company’s investments to improve capacity and efficiency, “FedEx is well positioned to support and benefit from the reopening of the global economy,” he said.
Business volumes decreased significantly due to worldwide business closings, but there were increases in residential deliveries for its FedEx Ground business and in trans-Pacific and charter flights for FedEx Express, the company said.
FedEx also incurred approximately $ 125 million in increased operating costs related to personal protective equipment and medical and safety supplies for its employees, as well as additional security and cleaning services to protect them, he said.
Operating results were affected by rising costs to expand services, among other factors, the company said. The company was also affected by the temporary closure of pandemic-related stores and declining print revenue at its FedEx Office stores.
FedEx net income includes a tax benefit of $ 71 million related to a provision of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) that allows offsetting tax losses with income from previous years that were taxed at higher rates. high. However, the benefit was primarily offset by a non-monetary tax expense of $ 51 million due to a change in deferred tax balances related to overseas operations, the company said.
Wall Street has been concerned that for both FedEx and the United Parcel Service Inc. UPS competitor,
loss of higher margin business-to-business volumes would nullify the benefits of the blessing on higher-to-higher cost deliveries related to online shopping.
FedEx said last month that it was charging a $ 370 million charge in the quarter, primarily related to falling print revenues and the temporary closure of FedEx offices and print shops.
FedEx shares have lost 8% this year, compared to losses of 5% and 10% for the S&P 500 SPX,
and the Dow Jones Industrial Average, respectively DJIA,
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