FedEx's Quarterly Profit Rises Over Selective Deliveries
FedEx Corp. posted better quarterly earnings and a higher-than-expected full-year projection on Thursday, after cherry-picking profit-boosting deliveries amid decreasing worldwide shipping demand, Lisa Baertlein reported for Reuters.
Photo Insert: FedEx Nordic gateway, Copenhagen
FedEx's widely monitored Ground unit profit rose over the previous quarter, propelling the Memphis-based company's stock up 2% to $232.75 in extended trade. This division handles the majority of the company's e-commerce home deliveries and fuels its growth.
However, it has lagged behind rival United Parcel Service (UPS), whose new CEO embraced a "better not bigger" philosophy two years ago.
Investors are putting pressure on FedEx's new CEO, Raj Subramaniam, to improve service and increase earnings in the company's sprawling and independently controlled Ground, Express, and Freight businesses. On June 1, Subramaniam took over as CEO of the 50-year-old corporation, which was founded by Fred Smith.
Ground margins jumped to 10% from 7.3 percent in the third quarter as executives increased fuel surcharges, reduced unprofitable shipments, and saw profit-eroding labor expenses begin to normalize.
Revenue per package increased by 11%. Executives expect higher transportation prices to remain, even as inflation, pandemic, and geopolitical threats impact on global economic activity. Adjusted net income for the fiscal fourth quarter ended May 31 increased 32% year on year to $1.8 billion, or $6.87 per share. Revenue increased by 8% to $24.4 billion.