FedEx Corporation (FDX) stock rose 6.5% today after the company, the world's largest express package provider, reported financial results for the quarter ended November 30.
The company posted an operating income of $1.6 billion, up 9% year-over-year.
Diluted EPS came in at $3.88, down $0.67 due to a tax benefit accrued in the same quarter last year.
Higher Operating Income
Michael C. Lenz, FedEx Corp. EVP and CFO, attributed the company's operating income growth to "strong revenue growth and effective management of cost and expected labor availability challenges.”
However, FedEx disclosed that higher revenue per shipment across all transportation segments was the main driver of the company's operating income surge.
FedEx Freight experienced the largest gains, with operating income increasing 33% year-over-year.
Revenue per shipment increased 14% and average daily shipments grew 3% during the quarter.
FedEx was also helped by higher yields and FedEx International Priority volume growth, which "more than offset the negative effects of continued staffing challenges and COVID-19-related air network inefficiencies."
Labor Shortages
FedEx Ground faced a number of challenges in the quarter, most notably related to the labor market.
The company disclosed that FedEx Ground faced "increased purchased transportation costs, higher wage rates, and network inefficiencies due to staffing shortages, which negatively affected year-over-year results by an estimated $285 million."
However, Raj Subramaniam, FedEx Corp. President & COO, stated that the company has been able to weather the storm due to, “strategic investments to FedEx networks and systems that have enabled us to provide critical delivery capacity and supply chain expertise to support the needs of our customers, while also making it possible for us to capitalize on the growing e-commerce parcel market."
