FedEx reinstates 2022 profit target, shares jump
Dozens of packages are lined up along a Manhattan street as a FedEx truck makes deliveries on December 06, 2021 in New York City.
Spencer Platt | Getty Images
U.S. delivery firm FedEx reinstated its original fiscal 2022 forecast on Thursday, even as persistent labor woes chipped away profits ahead of the peak holiday season when the number of packages it handles often doubles.
Shares in the company, which also reported flat year-over-year adjusted profit for the fiscal second quarter, jumped 6% to $253.00 in after-hours trading.
Memphis, Tennessee-based FedEx now expects full-year earnings, excluding items, of $20.50 to $21.50, as it had first forecast. In September, FedEx lowered its per-share forecast range to $19.75 to $21.00 per share.
Adjusted net income was $1.3 billion, or $4.83 per share, for the quarter ended Nov. 30, unchanged from the year earlier.
Labor shortages disrupted normal workflows, resulting in network inefficiencies, higher purchased transportation costs, and higher wage rates. Those factors increased costs by an estimated $470 million year over year, primarily at FedEx Ground. In the prior quarter, FedEx put those costs at $450 million.
In the latest quarter, the company also paid “significantly” higher taxes, but benefited from lower fuel prices.
Revenue increased 14% to $23.5 billion, fueled by elevated demand for e-commerce home deliveries.