A pedestrian walks past a parked FedEx delivery truck on March 21, 2024 in San Francisco, California.
Justin Sullivan | Getty Images
Fedex Shares soared more than 15% after the close on Tuesday after the company reported results that topped analyst estimates on both earnings and revenue.
Here's how the company fared in its fiscal fourth quarter compared to what Wall Street anticipated, according to a survey of analysts by LSEG:
- Earnings per share: $5.41 adjusted vs. $5.35 expected
- Revenue: $22.11 billion vs. $22.07 billion expected
The company reported net income for the three months ended May 31 of $1.47 billion, or $5.94 per share, compared with $1.54 billion, or $6.05 per share, a year earlier. .
Revenue rose to $22.1 billion, up slightly from $21.9 billion a year earlier. For the full fiscal year, revenue was $87.7 billion, down from $90.2 billion.
FedEx reported capital spending for fiscal 2024 was $5.2 billion, down 16% from $6.2 billion in fiscal 2023 and less than the $5.7 billion it forecast in its fiscal year guidance. 2024 last year.
For fiscal 2025, the company said it expects low- to mid-single-digit revenue growth year-over-year, driven largely by e-commerce and low inventory levels, FedEx Chief Customer Officer said Brie Carere, on the company's earnings conference call.
“We believe e-commerce is going to outpace B2B growth,” Carere said. “We like the fundamentals from an e-commerce perspective that will help us here in the United States and around the world.”
The capital spending decline comes as the company steps up its cost-cutting measures as part of a broad commitment to cut $4 billion by the end of fiscal 2025.
Following weak transportation demand, FedEx implemented its DRIVE transformation program to reduce costs and consolidate the business.
“DRIVE continues to change the way we work at FedEx. We achieved our goal of $1.8 billion in structural costs in fiscal '24,” CEO Raj Subramaniam said on the call.
Subramaniam said the company is firmly on track to achieve the $4 billion cost reduction target and also expects another $2 billion from the company's plans to consolidate its air and ground services.
As part of the DRIVE initiative, FedEx announced in April 2023 that it will consolidate its Express, Ground, Services and other delivery businesses into a unified Federal Express Corporation, which will operate under the FedEx brand and along with the company's freight segment, that will continue to exist. separately. The company said at the time that it expects the combined delivery business to handle all deliveries starting in June 2024.
The newly combined segments are expected to be the biggest driver of fiscal 2025 revenue and adjusted margin improvement, Chief Financial Officer John Dietrich said on the call.
FedEx also expects the demand environment to improve moderately over the next fiscal year, according to Carere.
Investors' eyes are also on the company's largest segment, Express, which has been struggling with margin growth last year. Segment margins ended the fourth quarter at 4.1%, unchanged year over year. Its operating margin for fiscal 2024 was 2.6%, up slightly from 2.5% last year.
Subramaniam said improving the performance of the Express segment is a “top priority” for the company.
While the company raised its quarterly dividend by 10% earlier this month, investors are anticipating headwinds, particularly after the company lost its contract with the US Postal Service to its rival. United Parcel Service n April.
UPS will become USPS' primary air cargo provider starting September 30, once FedEx's contract expires. USPS was the largest customer in the company's Express segment. The company shared that it expects a $500 million loss headwind in fiscal 2025.
