FedEx Corp. (NYSE:FDX) reported late Tuesday a $334 million net loss in its fiscal 2020 fourth quarter, as what is typically a solid period for the company collided this year with the worst part of the worldwide fallout from the coronavirus pandemic.
FedEx posted a $1.28-per-share loss in the quarter based on Generally Accepted Accounting Practices (GAAP). Adjusted non-GAAP results, however, came in at $2.53 per share, 11 cents a share above non-GAAP results of analysts polled by Barchart. Non-GAAP figures are usually adjusted for irregular or noncash expenses related to acquisitions, restructuring or one-time balance sheet modifications, among other temporary conditions.
Analysts’ projections for FedEx are generated on a non-GAAP basis. As a result, the company’s shares spiked in after-hours trading, rising about 9%.
Revenue fell slightly year-over-year to $17.4 billion. Operating income, however, was nearly halved to $475 million. Operating margins dropped to 2.7% from 5.2%. Net income in the fiscal 2019 fourth quarter was $663 million, underscoring the company’s traditional strength in the period.
FedEx experienced a surge in residential deliveries as store closures and government stay-at-home measures led to dramatic increases in online ordering, fulfillment and delivery. Increases in scheduled and charter air demand from Asia to the U.S. boosted revenue but also increased the company’s cost to serve. FedEx incurred a $125 million increase in operating costs to pay for additional cleaning and security services, and to buy large volumes of personal protective equipment, as well as medical and safety supplies.
Underlying all of this was the demand destruction in the company’s core business-to-business segment as businesses shut down in many worldwide commerce centers. Global industrial activity, FedEx’s bread-and-butter, has been weak for well over a year. The global response to the pandemic virtually obliterated the business in the quarter.