LOS ANGELES:Shares in U.S. delivery firm FedEx Corp shed 4.2% on Thursday after labor woes tempered its 2022 earnings forecast that missed Wall Street expectations.
The Memphis-based company’s shares fell $12.79 to $290.90 in extended trading, after it forecast fiscal 2022 earnings, excluding some items, of $18.90 to $19.90 per share – below analysts’ average estimate $20.37, according to Refinitiv data.
FedEx founder and CEO Fred Smith said on a conference call that he expects FedEx margins to continue to grow this year, but that operations are being crimped by an inability to find enough workers.
For example, its inability to attract new workers such as package handlers is driving higher overtime costs and requiring packages to be routed around areas with labor shortfalls, Chief Operating Officer Raj Subramaniam said.
The hiring challenges “have contributed to recent service levels that do not meet our own high expectations,” Subramaniam said.
Data from Convey Inc shows FedEx lags both UPS and the U.S. Postal Service when it comes to on-time deliveries.
FedEx recently suspended freight shipping for roughly 1,400 customers to help relieve pressure on its network – which has been running at near full tilt for much of the pandemic.
FedEx on Thursday reported a slightly higher than expected increase in quarterly profit and revenue.
Fiscal fourth quarter adjusted net income rose to $1.36 billion, or $5.01 per share, from $663 million, or $2.53 per share, a year earlier. Pandemic-fueled demand for e-commerce services supported higher fees and robust volumes contributed to cost savings.
Revenue increased 30% to $22.6 billion.
Analysts expected fourth-quarter earnings of $4.99 per share and revenue of $21.5 billion, according to Refinitiv.
FedEx and rival United Parcel Service Inc are raising rates and adding surcharges as retailers clamor to hand off more packages for delivery.
Investors are eager to know how each company will continue to grow profits from Internet retail as the pandemic ebbs. They also want to see a strong rebound in lucrative overnight business shipments as workers return to offices.
FedEx shares finished the regular trading session up roughly 150% from March 1, 2020 – some two weeks before U.S. states and jurisdictions began closing businesses to curb the spread of the coronavirus.
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