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Summary
- FedEx stocks jumped nearly 133 percent over the past year as the company’s profits grew.
- Its revenues for Q3 ended February 28, 2021, grew 23 percent to US$21.5 billion.
- Its average daily package volume had jumped 25 percent to 13.2 million during the quarter.
US delivery firm FedEx Corp’s (NYSE:FDX) net income surged 153 percent in the third quarter to US$939 million, compared to the same period a year ago, fuelled by surging volume of e-commerce deliveries.
Presenting its latest quarterly report last week, the company said that it expects the growth momentum to continue with the increase in e-commerce volumes due to the lifting of covid relaxations. CEO Frederick Smith said that the demand for deliveries to remain high in the foreseeable future.
FedEx stocks more than doubled in price over the past year, helped by robust demand for online deliveries during the pandemic and the holiday shopping season. The stock was priced at US$279.58 at close on Friday, which was a nearly 133 percent rise from a year ago when the restrictions were imposed.
Its revenues for the third quarter ended February 28, 2021, grew 23 percent to US$21.5 billion. The sales were driven by holiday package deliveries and vaccine shipments. This was despite a bitter cold wave in February that reduced operating income owing to large disruptions in transportation services.
FedEx hiked rates to offset the pandemic-linked losses, but a subsequent surge in demand for online deliveries, including bulky items, such as bikes and sofas, has come as a windfall. Its average daily package volume had jumped 25 percent to 13.2 million during the quarter. Some of its prominent shipment partners include Walmart.
The company, however, expects a slowdown in the short-term as more shoppers would return to the stores, post covid, but e-commerce would continue to be a significant driver of retail sales.
Pic Credit: Pixabay.
FedEx’s Green Targets
The world’s largest cargo airline wants to go carbon neutral by 2040 and has begun making plans to replace its gasoline-powered parcel pickup and delivery fleet with new energy sources.
It has created an initial corpus of US$2 billion for research on sustainable energy, carbon sequestration, and vehicle electrification. Around US$100 million would go to the Yale University for setting up a Center for Natural Carbon Capture, which will spearhead the research. According to FedEx CEO, the research initiative would help address the climate challenges faced by the entire industry.
It has also set an ambitious target of replacing 50 percent of its delivery vehicles with electric ones by 2025, and to increase that number to 100 percent by 2030.
Last month, FedEx had launched its ninth annual Small Business Grant Contest, which offers grants worth more than US$250,000 to 12 select US-based small businesses. The first prize winner gets US$50,000, plus US$7,500 worth of print and services from FedEx.
