On December 20 th , FedEx Corporation (NYSE: FDX) received the first five of 500 electric vans, making it the first customer to the receive the EV600s, which are the fastest built vehicles, from concept to market, in General Motors’ (NYSE: GM) history. Last Thursday, FedEx Corporation reinstated its 2022 profit target, despite persistent labor challenges that are chipping away profits ahead of the peak holiday season when the number of packages the company handles often doubles. The US-delivery firm reported flat YoY adjusted profit for its fiscal second quarter, with its shares jumping 6% during after-hours trading.
Fiscal second quarter results
Adjusted net income for the quarter ended on November 30 th was unchanged compared to last year’s comparable quarter as it amounted to $1.3 billion, or $4.83 per share. Revenue rose 14% to $23.5 billion due to increased demand for e-commerce home deliveries.
The shipping company was facing labor shortages that resulted in more than higher wage rates, bringing on workflow inefficiencies, network disruptions and higher transportation costs, together increasing costs by an estimated $470 million YoY, primarily at FedEx Ground. In its previous quarter, they costed the company $450 million. FedEx also paid significantly higher taxes in the reported quarter but fortunately benefited from lower fuel prices.
Guidance
FedEx reinstated its full-year adjusted earnings to be in the range between $20.50 to $21.50, as back in September, it was forced to lower its range from $19.75 to $21.00 per share.
BrightDrop marks a historic moment
Bright Dorp is a light commercial vehicle born out of a collaboration between two leading American companies. The introduction of the all-electric vehicles into its fleet is an important milestone for FedEx’s ambitious sustainability goal to make its global operations carbon neutral by 2040.
The EV600 combines the best of a traditional vehicle and a step-in while prioritizing driver safety, comfort and convenience. Powered by GM’s Ultium battery platform, the EV600 has been specifically designed for deliveries, with an estimated range of up to 250 miles on a full charge.
Recap
The Tennese-based shipping giant reported better-than-expected fiscal second-quarter earnings last Thursday after the bell while also reinstating its brighter guidance. As COO Raj Subramaniam summed up, labor pressures are starting to fade, allowing the company to benefit of a very strong demand and a favorable pricing environment.
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