In this photo, the FedEx logo is seen in Washington DC, USA on February 16, 2023.
Seral Gunz | Anadolu Agency | Getty Images
fedex On Thursday, it raised its full-year earnings forecast after it said cost-cutting measures would offset continued weak demand in units including FedEx Express.
FedEx now expects adjusted earnings per share of $14.60 to $15.20 for fiscal 2023. Wall Street expected full-year EPS of $13.56, according to Refinitiv’s consensus forecast.
CFO Mike Lenz said: “Every dollar is under scrutiny.”
The company’s stock surged more than 11% in after-hours trading.
FedEx’s achievements include: Q3 FY2023compared to Refinitiv:
- Earnings per share: Adjusted $3.41 vs $2.73 expected
- Earnings: $22.17 billion vs. $22.74 billion forecast
Revenue of approximately $22.2 billion decreased 6% from $23.6 billion in the third quarter of 2022.
FedEx reported a net profit of $771 million for the period, down from $1.11 billion in the same period last year. Adjusting for one-off items, his earnings per share on FedEx were $3.41, better than expected but down significantly from $4.59 per share in the same period last year.
The company reiterated on Thursday that it expects more than $4 billion in cost savings by the end of fiscal 2025.
CEO Raj Subramaniam said in the earnings call:
Last month, Memphis, Tennessee-based FedEx announced it was laying off 10% of its executives and directors as part of a broader plan to cut costs amid cooling consumer demand. Subramanian said in the company’s earnings call that certain staffing-related costs were down 8% year-over-year. He said US headcount is expected to fall by about 25,000 from the previous year.
FedEx’s cost-saving plans also include reducing flights and grounding aircraft, reducing office space, and adjusting pickup and delivery ground units.
Subramanian said the company saved $1.2 billion in total corporate costs year over year. This quarter, FedEx reduced flight hours by 8% and reduced salaries and benefits by 4%. With additional aircraft expected to park in the fourth quarter, flight hours are expected to decline by double digits.
The company expects to save an additional $50 million in the next quarter after removing some of its domestic pickup routes and improving courier efficiency.
FedEx raised its delivery rates by an average of 6.9% in January to offset the cooling in demand, and Thursday reported an 11% increase in revenue per shipment in the third quarter.
The company also said it expects sales volumes to improve this quarter and in the first quarter of next fiscal year.
FedEx to provide updates to investors April 5th event. The company could also comment on tense contract negotiations with FedEx pilot unions. The pilots unanimously approved the union to allow strikes, but strikes in industry only occur after a long and complicated process.
