FedEx has announced its Q3 earnings, with higher growth that over H1 and more growth expected in Q4. Operating income was up 32% year-on-year up to $1.3bn and up 37% on an adjusted basis. Revenue was up 9.77% from Q3 2020 up to $23.6bn. This follows strong annual results from rivals.
FedEx Express operating results increased, driven by higher yields, a net fuel benefit, and lower variable compensation expense. The improved results were partially offset by the negative effects of the Omicron variant, which constrained near-term economic growth, labour availability, and shipping demand. These effects also resulted in lower express freight revenue, as air capacity limitations drove a temporary suspension of International Economy Express Freight services and certain U.S. Domestic Express Freight services during the quarter. These negative effects on third quarter results fully offset the estimated benefit from less severe winter weather.
FedEx Ground operating results declined primarily due to increased rates for purchased transportation and employee wages, network inefficiencies, and expansion-related costs. These costs were partially offset by higher revenue per package, a boost from two additional ground commercial operating weekdays, and a net fuel benefit. Average daily volume was flat, as Ground Economy declined and growth in commercial and FedEx Home Delivery services was, again, constrained by the effects of the Omicron variant.
FedEx Freight third quarter operating income nearly tripled, driven by a continued focus on revenue quality and profitable growth. Revenue per shipment increased 19% and average daily shipments grew 2% during the quarter, while the operating margin increased 850 basis points to 15.0%.
The previously announced accelerated share repurchase program (ASR) was completed during the quarter and 6.1m shares were delivered under the ASR agreement. The decrease in outstanding shares benefited third quarter results by $0.06 per diluted share. Cash on-hand as of February 28, 2022 was $6.1bn.
Source: FedEx
