FedEx (FDX, $228.13) has delivered once again, and it's not just your package we're talking about. The logistics giant saw its stock jump by 2.6% in extended trading after releasing an annual earnings forecast above analysts' expectations as the courier benefited from higher package prices and resolved some operating snags tied to the labor shortage.
FedEx raked in $24.4 billion in revenue for the 2022 fiscal year's fourth quarter, an 8% increase from the year-before quarter's $22.6 billion. The company posted an adjusted operating income of $1.80 billion, a 32% increase from last year's $1.36 billion. FedEx forecast adjusted earnings for this fiscal year of between $22.50 and $24.50 a share, higher than analyst expectations of $22.14. The company attributes its financial performance to its team's "ability to adapt to a number of unexpected challenges and is a testament to the FedEx value proposition and the execution of our long-term strategy", according to Raj Subramaniam, FedEx Corp. president and chief executive officer.
Business-to-business shipping traffic has rebounded, while business-to-consumer volume has surged as more home deliveries are being made. Since the pandemic hit, FedEx and other couriers have had the upper hand on shippers and aggressively raised delivery prices as package demand spiked. However, it's unclear how long the pricing power will last as package volume begins to cool. The company said it also gained from surcharges related to rising fuel costs.
Why it matters
With package growth slowing as the pandemic fades and more people spend on entertainment and travel instead of buying another grill or trampoline, it begs the question where do delivery couriers go from here? It will still be a cautious approach, especially with headwinds in the form of supply chain issues, ongoing COVID lockdowns in China as well as rising inflation which is set to hit the pockets of consumers.
