FedEx reports 30% jump in Q4 revenues buoyed by online shopping trends
FedEx’s business remained upbeat helped by a surge in online shopping and the growth of its business-to-business shipping services, the company announced in its earnings report.
The logistics major reported $22.6 billion in revenue for the 2021 fiscal year’s fourth quarter, up 30 percent from the year-before quarter. The company posted an adjusted net income of $1.36 billion, well ahead of last year's $663 million.
“I thank our team members around the world for their outstanding efforts during this extraordinary year,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “We continue to play an important role in global economic recovery and the delivery of Covid-19 vaccines and relief supplies throughout the US, Canada and more than 35 other countries. I am optimistic about the future of FedEx as we continue to innovate for our customers and meet strong demand for our global transportation network and capabilities.”
Fourth quarter operating results increased primarily due to volume growth and disciplined revenue and portfolio management. These factors were partially offset by costs to support strong demand, increased variable compensation expense, and higher labour rates.
FedEx Express’ fourth quarter operating income more than doubled year over year, driven by exceptional growth in international export and US domestic package services. Operating margin increased 260 basis points (an adjusted 340 basis points; adjusted measures exclude the items listed below for the applicable fiscal year), as improved network optimization and asset utilization enabled profit growth from record fourth quarter volume.
FedEx Ground reported record earnings for the quarter and revenue growth of 27 percent. The revenue increase was primarily driven by strong growth in business-to-business shipments and a 14 percent rise in revenue per package. Operating margin improved 310 basis points to 13.6 percent due to strong revenue growth and slower growth in purchased transportation expenses, aided by a higher mix of business-to-business shipments and benefits from dynamic route optimization technology. This improvement was partially offset by higher expenses driven by constrained labor availability.
FedEx Freight reported record earnings and operating margin of 16.1 percent for the quarter, as average daily shipments grew 30 percent and revenue per shipment increased 6 percent. Operating results improved primarily due to the continued focus on revenue quality and profitable growth.
FedEx is unable to forecast the fiscal 2022 mark-to-market (MTM) retirement plan accounting adjustments. As a result, FedEx is unable to provide a fiscal 2022 earnings per share or effective tax rate (ETR) outlook on a GAAP basis.
For fiscal 2022, FedEx is forecasting earnings per diluted share of $18.90 to $19.90 before the MTM retirement plan accounting adjustments; earnings per diluted share of $20.50 to $21.50 before the MTM retirement plan accounting adjustments and excluding estimated TNT Express integration expenses and costs associated with business realignment activities.
The company is forecasting capital spending of $7.2 billion, with continued investment in the key strategic priorities of e-commerce, operational excellence and efficiency. Strategic initiatives include accelerated capacity expansion, fleet and facility modernization, and increased automation.
These forecasts assume continued recovery in US industrial production and global trade, no additional Covid-19-related business restrictions, and current fuel price expectations. FedEx’s ETR and earnings per share forecasts are based on current law and related regulations and guidance.
“The ongoing execution of our strategic initiatives has driven significant improvement in our fourth quarter results and highlights the continued strength of our business,” said Michael C. Lenz, FedEx Corp. executive vice president and chief financial officer. “For fiscal 2021, we delivered record financial results while also recognizing the valuable contributions by our team members. We expect continued strong momentum in fiscal 2022, and our investments are focused on the areas of greatest growth and highest returns, like ecommerce, to position us for sustained long-term growth in earnings, cash flows, and returns.”