This photo shows the FedEx logo on February 16, 2023 in Washington, DC.
Jelal Gunes Anadolu Agency Getty Images
FedEx FedEx Express on Thursday raised its full-year revenue forecast, saying cost-cutting measures offset weak demand, including at divisions.
FedEx now expects fiscal 2023 adjusted earnings per share of between $14.60 and $15.20, up from its prior estimate of between $13.00 and $14.00. Wall Street expected full-year EPS of $13.56, according to Refinitiv consensus estimates.
The company’s shares rose more than 11% in after-hours trading.
Here’s how FedEx performed in its third fiscal quarter of 2023 compared to Refinitiv:
- Earnings per share: Adjusted to $3.41 vs. $2.73 expected
- Input: $22.17 billion versus an estimate of $22.74 billion
Revenue of about $22.2 billion was down slightly on the year from $23.6 billion in the third fiscal quarter of 2022.
FedEx reported net income of $771 million for the period, down from $1.11 billion in the year-ago quarter. Adjusting for one-time items, FedEx posted earnings of $3.41 per share, which beat estimates but represented a sharp year-over-year decline from $4.59 per share for the same period last year.
The company reiterated Thursday that it expects to benefit from more than $4 billion in cost reductions by the end of fiscal 2025.
“We continued to move aggressively to improve efficiency and our cost measures are on track to provide an improved outlook for the current fiscal year,” CEO Raj Subramaniam said in an earnings statement.
Last month, Memphis-based FedEx said it would lay off 10% of its officers and directors as part of a broader plan to cut costs amid falling customer demand. Subramanian said in the company’s earnings statement that some employee-related costs were down 8% year-over-year. He said the U.S. workforce is expected to decline by about 25,000 annually.
FedEx’s savings plans also include reducing flights and grounding aircraft, reducing office space and making adjustments to the ground facility for receiving and shipping.
Subramanian said the company saved $1.2 billion in total enterprise costs during the year. During the quarter, the company cut flight time by 8% and salary and benefits costs by 4%. The company plans to lay down additional aircraft in the fourth quarter, and flight hours are expected to decrease by double digits.
The company expects to save another $50 million in the next quarter after eliminating some domestic pickup and delivery routes and making courier services more efficient.
FedEx raised shipping rates by an average of 6.9% in January to offset cooling demand and reported an 11% increase in shipping revenue in the fiscal third quarter on Thursday.
The company also said it expects volumes to improve in the current quarter and the first fiscal quarter of next year.
FedEx is expected to update investors at an April 5 event. The company could also comment on the fraught contract negotiations with the FedEx pilots union. Pilots unanimously approved the union’s authorization to strike, but strikes involve a long and complicated process in the industry.