FedEx Corp. reports robust adjusted earnings for third quarter

A strong peak season and sustained e-commerce demand is giving FedEx Corp. shareholders another reason to cheer on St. Patrick’s Day.

FedEx Corp. reported adjusted earnings of $2.51 per diluted share for the third quarter ended February 29, compared to adjusted earnings of $2.03 per diluted share a year ago. Without adjustments, FedEx reported earnings of $1.84 for the third quarter compared to $2.18 per diluted share last year.

This year’s quarterly consolidated earnings have been adjusted for expenses related to certain legal matters ($0.61 per diluted share) and the pending acquisition of TNT Express ($0.06 per diluted share).

Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer, told analysts that the company’s strong financial performance was driven by increasing demand for its “broad portfolio of FedEx business solutions.”

At the same time, he maintained that retailers should be paying more for shipments to keep costs from e-commerce contained.

Jerry Hempstead, President, of Hempstead Consulting, sat in on the call and noted that the “incredible increase” was a consequence of careful planning.

“Their margins improved considerably over the prior year driven by increases in package volumes,” he said. “It was also due to all the yield improvement pricing actions they have taken over the last few years that are now compounding.”

Hempstead, who provided insight for shippers in this year’s annual rate forecast, also observed that Fedex took the opportunity during the investor call to announce another yield improving rule change that becomes effective June 1.

“I expect the UPS to quickly announce their match of this move,” added Hempstead.

Also notable in the call was their “diatribe” on the moves Amazon has been making, and to position themselves in the call to distance themselves from addressing any questions, said Hemstead.

“They deflected this by saying ‘we already covered this,’” he said.