FedEx Corp. reported decent fiscal 2022 second-quarter results late Thursday, as higher-yielding volumes helped offset the ongoing cost drag of labor shortages at its FedEx Ground unit that have cut into operating margins.
In addition, the board of the Memphis, Tennessee-based shipping and logistics giant (NYSE: FDX) authorized a program to buy back $5 billion of its common shares. This follows a 2016 buyback authorization of up to 25 million shares, of which 2.3 million remain available for repurchase. The step announced Thursday does not commit the company to repurchase shares.
For the 2022 quarter, adjusted diluted earnings per share came in at $4.83, unchanged from the fiscal 2021 second quarter. The fiscal 2022 EPS numbers were above analysts’ median estimates of $4.25 to $4.28 per share. EPS was unchanged from the same period a year ago. Revenue rose to $23.5 billion from $20.6 billion.
FedEx shares rose more than 6% in early after-hours trading to $253.19 a share, after being down less than 1% during the regular session. Shares have fallen 17% over the past 52 weeks and are substantially off their high of just under $320 a share reached in late May.
Several tax-related adjustments impacted EPS and net income in both quarters. The 2022 net income figure included a $260 million pretax, noncash loss from terminating the European pension plan at the company’s TNT Express unit. Last year’s net income figures included a $191 million tax benefit, or 71 cents per share, from favorable guidance issued by the Internal Revenue Service, the company said.
Adjusted operating income climbed 11% to $1.68 billion due to solid results from the company’s FedEx Express air and international unit and its FedEx Freight LTL business. Volumes and yields grew at both units, FedEx said.
FedEx Ground, the company’s ground-parcel delivery unit that hauls virtually all e-commerce in the U.S., reported a decline in operating results due to staffing problems and network inefficiencies that reduced year-over-year income by $285 million. The unit also experienced higher costs related to expanding its network for the peak holiday shipping season and beyond. The higher costs were partially offset by an increase in revenue per package, FedEx said.