On this photo FedEx logo is seen in Washington D.C., United States on February 16, 2023.
Celal Gunes | Anadolu Agency | Getty Images
FedEx on Thursday hiked its full-year earnings forecast because it said cost-cutting measures offset continued demand weakness at units including FedEx Express.
FedEx now expects adjusted earnings per share for fiscal 2023 of between $14.60 and $15.20, up from a previous forecast of between $13.00 and $14.00. Wall Street had expected full-year EPS of $13.56, in response to Refinitiv consensus estimates.
“We’re holistically adjusting to the fee base on all dimensions and all areas,” said CFO Mike Lenz. “Every dollar is under scrutiny.”
The corporate’s stock spiked greater than 11% in after-hours trading.
Here’s how FedEx performed in its fiscal third quarter of 2023, compared with Refinitiv:
- Earnings per share: $3.41 adjusted vs. $2.73 expected
- Revenue:Â $22.17 billion vs. $22.74 billion expected
Revenue of about $22.2 billion marked a 6% drop from $23.6 billion in the course of the fiscal third quarter of 2022.
FedEx reported net income of $771 million for the period, down from $1.11 billion in the course of the same quarter a 12 months earlier. Adjusting for one-time items, FedEx posted per-share earnings of $3.41, which beat estimates but marked a dramatic year-over-year decline from the $4.59 per share it reported for a similar period last 12 months.
The corporate reiterated Thursday it’s expecting to make greater than $4 billion in cost reductions by the top of fiscal 2025.
“We have continued to maneuver with urgency to enhance efficiency, and our cost actions are taking hold, driving an improved outlook for the present fiscal 12 months,” CEO Raj Subramaniam said in an earnings release.
Last month, Memphis, Tennessee-based FedEx said it will lay off 10% of its officers and directors as a part of its wide-sweeping plan reduce costs while consumer demand cools. Subramanian said on the corporate’s earnings call that certain staffing-related expenses were down 8% 12 months over 12 months. He said U.S. head counts are expected to be down roughly 25,000 12 months over 12 months.
FedEx’s cost-saving plans have also included cutting flights and grounding planes, reducing office space, and making adjustments to the Ground unit in pick-up and delivery.
Subramanian said the corporate saved $1.2 billion on total enterprise costs 12 months over 12 months. This quarter, FedEx reduced flight hours by 8% and salary and profit expenses by 4%. It plans to park additional aircraft within the fourth quarter, and flight hours are expected to say no by double digits.
The corporate expects to avoid wasting one other $50 million next quarter after removing some domestic pickup and delivery routes and improving courier efficiency.
FedEx raised its shipping rates by a median of 6.9% in January to offset cooling demand and on Thursday reported an 11% increase in revenue per shipment during its fiscal third quarter.
The corporate also said it expects volumes to enhance in the present quarter and into its fiscal first quarter of next 12 months.
FedEx is anticipated to update investors at an April 5 event. The corporate could also comment on tense contract negotiations with its FedEx pilots’ union. Pilots unanimously approved allowing the union to authorize a strike, though strikes within the industry only occur after a lengthy and complex process.
