#FedExEarnings #CostCutting #StrategicGrowth
FedEx Shares Soar 15% After Hours Following Stellar Q4 Performance
As I analyzed FedEx's fiscal fourth quarter earnings, I was struck by the company's remarkable performance, which exceeded analysts' expectations and sent shares surging over 15% in after-hours trading. The stellar results were driven by a combination of cost-cutting measures and strategic initiatives.
In the quarter ending May 31, FedEx reported adjusted earnings per share of $5.41, surpassing the expected $5.35. Revenue also exceeded projections, reaching $22.11 billion compared to the anticipated $22.07 billion. While net income dipped slightly to $1.47 billion, or $5.94 per share, from $1.54 billion, or $6.05 per share, in the previous year, revenue climbed to $22.1 billion from $21 billion.
Despite a decrease in capital spending for fiscal 2024 to $5.2 billion, down 5% from the previous year and below the company's forecast, FedEx anticipates low to mid-single-digit revenue growth for fiscal 2025. This growth is expected to be driven by e-commerce and reduced inventory levels. The company is intensifying its cost-saving efforts under the DRIVE transformation program, aiming to achieve a $4 billion reduction by the end of fiscal 2025.
One key strategic move is the consolidation of its delivery entities into a unified Federal Express Corporation, operating alongside its Freight segment. This consolidation, effective from June 2024, is expected to significantly impact fiscal year 2025 adjusted income and margin enhancement.
FedEx remains focused on improving the performance of its Express segment, which has faced margin growth struggles. The company raised its quarterly dividend by 10%, but foresees a $500 million headwind in fiscal 2025 due to the loss of its U.S. Postal Service contract to UPS. UPS is set to take over as the primary air cargo provider for USPS after FedEx's contract expires on September 30.
Original Article: https://www.cnbc.com/2024/06/25/fedex-fdx-earnings-q4-2024.html
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