FedEx on Thursday raised its full-year earnings guidance as cost-cutting measures offset continued weakness in demand.
FedEx beat Wall Street estimates on adjusted earnings per share but missed revenue.
“We have continued to urgently strive to improve efficiency and our cost measures are taking effect, providing an improved outlook for the current fiscal year,” CEO Raj Subramaniam said in a earnings statement.
This photo shows the FedEx logo on February 16, 2023 in Washington DC, USA.
Celal Gunes | Anadolu Agency | Getty Images
FedEx on Thursday raised its full-year profit forecast as cost-cutting measures offset continued demand weakness at units like FedEx Express.
FedEx now expects fiscal 2023 adjusted earnings per share to be between $14.60 and $15.20, up from a previous guidance of between $13.00 and $14.00. Wall Street had expected full-year earnings per share of $13.56, according to Refinitiv consensus estimates.
The company’s shares are up 8% in after-hours trading.
Here’s how FedEx performed compared to Refinitiv in the third quarter of fiscal 2023:
Earnings per share: $3.41 adjusted vs $2.73 expected
Revenue: $22.17 billion versus $22.74 billion expected
Revenue of approximately $22.2 billion marked a slight year-over-year decrease of $23.6 billion in the third quarter of fiscal 2022.
FedEx reported net income of $771 million for the period, compared to $1.11 billion in the same quarter last year. Adjusted for one-time items, FedEx reported earnings per share of $3.41, beating estimates but marking a dramatic decrease from $4.59 per share compared to the year-ago period.
The company reiterated Thursday that it expects more than $4 billion in cost reductions by the end of fiscal 2025.
“We have continued to urgently strive to improve efficiency and our cost measures are taking effect, providing an improved outlook for the current fiscal year,” CEO Raj Subramaniam said in a earnings statement.
Last month, Memphis-based FedEx announced it was laying off 10% of its officers and directors as part of its far-reaching plan to cut costs while consumer demand cools. The plans also include cutting flights and grounding aircraft, reducing office space and ground unit adjustments in pickup and delivery, CFO Mike Lenz said on the company’s second-quarter earnings call.
FedEx increased its shipping rates by an average of 6.9% in January to offset this, and on Thursday reported an 11% increase in revenue per shipment in the fiscal third quarter.
FedEx is expected to update investors at an event on April 5. The company was also able to comment on the tense contract negotiations with the pilots’ union FedEx. The pilots unanimously agreed with the union to authorize a strike, even though strikes are a long and complicated process in the industry.
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