March 17, 2022
(Reuters) -U.S. delivery firm FedEx Corp posted a lower-than-expected quarterly profit on Thursday after ongoing labor woes and the Omicron coronavirus outbreak helped erode holiday-fueled revenue growth.
Shares in FedEx slipped 0.8% in extended trading.
E-commerce shipments have bolstered revenue at FedEx and United Parcel Service since the start of the COVID-19 pandemic – but FedEx has been less successful than its rival at translating that business into profit.
FedEx needs to start capitalizing on an extremely strong demand environment and “showing investors that they are starting to use that increased revenue more efficiently – that they’re managing costs better,” said Patrick Donnelly, an analyst at Third Bridge Group.
In January, FedEx warned that Omicron infections caused staff shortages and delayed shipments in its aircraft-dependent Express operation. That news came after FedEx said staffing shortages in its Ground division were hurting profits and delaying deliveries.
Meanwhile, the unionized workforce at UPS has been a bright spot in the tight U.S. labor market. UPS employees receive better pay and benefits than their non-union peers that deliver for FedEx and Amazon.com, which have struggled to hire and retain drivers and other key workers. Memphis-based FedEx’s adjusted net income for the fiscal third quarter increased almost 30% to $1.22 billion, or $4.59 per share. That missed analysts’ call for a profit of $4.64 per share, according to Refinitiv I/B/E/S Estimates.
Revenue for the quarter ended Feb. 28 grew 9.8% to $23.6 billion.
(Reporting by Lisa Baertlein in Los Angeles and Aishwarya Nair in Bengaluru; Editing by Devika Syamnath and Jonathan Oatis)