FedEx announces Q3 2020 results and suspends outlook in light of coronavirus outbreak

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FedEx has released financial results for its Q3 2020. Reported revenues totalled $17,487m (2019: $17,010m), up 2.8% year-on-year. Operating income totalled $411mm (2019: $911m), down 54.8% year-on-year and resulting in a 2.4% reported margin.

According to FedEx, operating results declined due to weaker global conditions including the impact of the coronavirus, higher self-insurance accruals, an unfavourable variable incentive compensation comparison, increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer, a continuing mix shift to lower-yielding services and a more competitive pricing environment. These factors were partially offset by the benefits from volume growth at FedEx Ground, an additional operating weekday, increased yields at FedEx Freight and the shifting of Cyber Week into December.

FedEx Express business segment Q3 2020 revenues totalled $8,924m, down 0.9% year-on-year (2019: $9,005m), while its operating income was $137m, down 64.8% year-on-year (2019: $389m).

Revenues in FedEx Ground segment totalled $5,845m, up 11.1% year-on-year (2019: $5,261m), with operating income totalling $355m, down 39.4% year-on-year (2019: $586m).

FedEx Freight segment revenues totalled $1,738m, down 0.7% year-on-year (2019: $1,750m), and operating income was $113m, up 16.5% year-on-year (2019: $97m).

“We are suspending our fiscal 2020 earnings forecast for our consolidated and segment results due to the uncertainty caused by the coronavirus pandemic,” said Alan B. Graf, Jr., FedEx Corp. Executive Vice President and Chief Financial Officer. “To mitigate these near-term headwinds and position the company for future earnings growth, we are attacking costs throughout the company by managing capacity, retiring our oldest and least-efficient aircraft, integrating TNT Express, and lowering our residential delivery costs by having FedEx Ground deliver FedEx SmartPost and certain day-definite FedEx Express packages.”

Source: FedEx