FedEx's quarterly results were more-or-less as expected, with continued increases in revenue and profits whilst the numbers for the full year were even more impressive.
For the full-year revenue leapt by 21% to $84bn whilst net income quadrupled to $5.2bn. Revenue rose by 30% for the quarter to $22.6bn whilst operating profits more than trebled to $1.8bn. Admittedly last year’s results were depressed, flattering this year's numbers.
At the core, FedEx Express saw continuing growth in demand, with operating income up by 182% to $2.8bn which FedEx said was "driven by exceptional growth in international export and U.S. domestic package services" leading to operating profit margins increasing by 260 basis points in the fourth quarter. Improved profitability is underpinned by better asset utilisation.
FedEx Ground also did well with "FedEx Ground reported record earnings for the quarter and revenue growth of 27%". For the year operating income is up 59% to $3.2bn "primarily driven by strong growth in business-to-business shipments and a 14% rise in revenue per package".
As with FedEx Express, profit margins hardened and the mix of business improved. That said, FedEx indicated that here labour costs were starting to rise. It was a similar picture at FedEx Freight with "record earnings" seeing a 73% jump to just over $1bn. Again the 30% rise in average daily shipments enabled a 6% rise in revenue per shipment.
All of this might suggest that FedEx faces an immediate prospect of sustained profitability. Yet the company did not issue any guidance for its profits in 2022, due specifically to uncertainties concerning pension liabilities. There are also other underlying issues that might suggest further caution for the future. Direct labour costs may be becoming a significant problem but also there are signs that FedEx and others are having difficulty keeping up with demand leading to both a loss of market share and increased need for higher capital expenditure. It is not that FedEx is likely to see a fall in profits any time soon, however, it might not be able to expect the double-digit growth to be sustained.
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