Delivery giant FedEx posted an upswing in revenue of 14% to $23.5 billion for the second quarter, despite higher wages and labor shortages that were offset by an increase in shipping rates.
Adjusted net income was $1.3 billion, or $4.83 per share, for the quarter ended Nov. 30, unchanged from the year earlier. Labor shortages threw a wrench in workflows, which triggered network inefficiencies and higher transportation costs on top of bigger paychecks, the shipping giant said in its report on Thursday (Dec. 16).
Those factors hit FedEx Ground especially hard, which was responsible for a large portion of the estimated $470 million in new expenses year-over-year.
“Our operating income increased during the quarter, thanks to the enormous efforts of our team members,” Frederick W. Smith, FedEx Corp. chairman and CEO, said in the report. “We are nearing the finish line of another robust peak shipping season, and we salute our more than 600,000 team members worldwide for their dedication in delivering the holidays to our customers.”
See also: Salesforce, FedEx Ink Multi-Year Logistics Partnership for eCommerce Merchants
FedEx is forecasting its full-year earnings, excluding items, of $20.50 to $21.50 per share. Its September meeting had the same forecast but with a lowered range of to $19.75 to $21.00 per share.
Shares jumped 6% after quarterly earnings and revenue surpassed analysts’ expectations and reinstated its original fiscal 2022 forecast, after lowering it in September.
“FedEx operating income grew in our second quarter, driven by strong revenue growth and effective management of our cost and expected labor availability challenges,” Michael C. Lenz, FedEx Corp. executive vice president and chief financial officer, said in the report.
“While adjusted earnings per share was unchanged year-over-year, this year’s effective tax rate was significantly higher, as last year’s earnings included a $0.71 per share tax benefit.”
Shares in the company, which also reported flat year-over-year adjusted profit for the fiscal second quarter, were up 5% to $250.50 in after-hours trading. FedEx Chief Operating Officer Raj Subramaniam said labor pressures should ease going forward.
“We are essentially staffed up for peak,” Subramaniam said on an investors call, adding that the carrier believes it can retain required labor for the remainder of its fiscal year.
Read more: FedEx Investing $100M In India’s Delhivery To Expand International Shipping
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