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FedEx Corp FDX

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Robust B2C Volume Persists in FedEx's Fiscal Q2 but Ground Margins Less Impressive Than Last Quarter

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

FedEx’s fiscal second-quarter 2021 (ended November) revenue expanded a solid 19% year over year, above our expected run rate--especially at Ground--and ahead of the 13% rise last quarter. Consistent with recent quarters, the marked e-commerce shift is driving substantial residential package growth at Ground--total average daily volume grew 29%. Additionally, limited airlift capacity is boosting Express’ international export volume and retailer restocking is rejuvenating Freight’s LTL demand. Ground yields rose an impressive 7% as constrained last-mile capacity (exacerbated by a robust peak) has lifted FedEx’s pricing power. Express' revenue per package grew 2%, while Freight’s yields rose 4%. B2B package activity remains sluggish, especially in Europe, but is improving.

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Company Profile

Business Description

FedEx pioneered overnight delivery in 1973 and remains the world's largest "express" package provider. In its fiscal 2020 (ended May 2020), FedEx derived 51% of revenue from its express division, 33% from ground, and 10% from freight; its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth- largest global parcel-delivery provider.

942 South Shady Grove Road
Memphis, TN, 38120
T +1 901 818-7500
Sector Industrials
Industry Integrated Freight & Logistics
Most Recent Earnings Nov 30, 2020
Fiscal Year End May 31, 2021
Stock Type Cyclical
Employees 506,000