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Monday, February 6, 2023

FedEx restores profit target for 2022, stocks skyrocket

LOS ANGELES. American shipping company FedEx Corp. recovered its original forecast for fiscal 2022 on Thursday, despite persistent worker problems dropping profits ahead of the peak holiday season, when the number of parcels it handles often doubles.

The company, which also posted flat second-quarter adjusted earnings from the same period last year, rose 5% to $ 250.50 after trading closed.

FedEx Chief Operating Officer Raj Subramaniam said pressure on the workforce should ease in the future.

“We are essentially staffed for maximum workload,” Subramaniam said. He added that the carrier believes it will be able to maintain the required workforce until the end of the fiscal year.

Fears that the 2020 Shipageddon pandemic could be delayed again during the holiday season this year has diminished. Retailers have eased pressure on carriers such as FedEx and United Parcel Service by encouraging early purchases and increased pick-up and delivery options. In the meantime, most stores remain open, despite an increase in the number of Omicron variants infestations.

FedEx, based in Memphis, Tennessee, now expects annual earnings excluding items of $ 20.50 to $ 21.50 per share, as it did in the first forecast. FedEx cut that range to $ 19.75 in September to $ 21 per share.

Adjusted net income for the quarter ended November 30 was $ 1.3 billion, or $ 4.83 per share, unchanged from a year earlier.

In the company’s second fiscal quarter, labor shortages disrupted normal work flows again, resulting in network inefficiencies, higher purchase transport costs and higher wage rates. These factors pushed up costs by approximately $ 470 million year over year, mostly at FedEx Ground. The company estimated these costs in the first quarter of the fiscal year at $ 450 million.

FedEx paid “significantly” higher taxes in the last quarter but benefited from lower fuel prices.

Revenue increased 14 percent to $ 23.5 billion, driven in part by increased demand for home delivery via e-commerce, including some holiday gifts.

However, experts and some customers said FedEx is lagging behind UPS and the US Postal Service in delivering on-time.

“FedEx delivery times are really lagging behind, and I believe this is due to a shortage of staff,” said Kathy Morrow Roberson, president of Logistics Trends & Insights, a consulting firm.

Between November 14 and December 4, including holidays for Thanksgiving and Cyber ​​Monday purchases, order fulfillment was 85.7% on-time for FedEx, 96.4% for UPS, and 95.1% for US Postal Service, according to the auditor of shipping invoices. ShipMatrix. …

According to ShipMatrix founder Satish Jindel, the results for the week of December 5 are mostly in line with those of the previous weeks.

The FedEx delivery deadline for Christmas is Wednesday, December 15th.

Lisa Burtlein


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