Published - December 21, 2022 @ 3:46 PM (EET)
Lifted by price increases and cost-cutting that helped make up for package volume decline, FedEx Corp. (NYSE:FDX) reported fiscal second-quarter earnings that beat analysts' expectations.
Shares of the delivery giant rose about 3% in late trading Tuesday after the company announced it would slash an additional $1 billion in costs after weak demand ate into its quarterly profit.
Beyond the cost-cutting measures projected in September, the total fiscal 2023 savings will amount to $3.7 billion. FedEx is now planning to park planes, close offices, stop rural Sunday delivery, and lay off workers in its freight division.
Elsewhere, the company has reduced domestic flight hours in the US by 6% and 7% internationally this year.
EARNINGS RESULTS
In the three months ending November 30, FedEx's net income fell from $1.04 billion a year earlier to $788 million.
Sales dropped to $22.8 billion, Falling short of estimates of $23.7 billion and down from $23.5 billion in the year-ago period.
Excluding some items, earnings totaled $3.18 a share, the courier said in a statement Tuesday. Analysts expected earnings of $2.81 per share.
Chief Executive Officer Raj Subramaniam, who took over the role from founder Fred Smith on June 1, said FedEx is making
"rapid progress on our ongoing transformation while navigating a weaker demand environment."
The average amount of packages handled daily by FedEx fell 10.2% from the year-ago quarter.
NOW WHAT
Though analysts cheered the Tennessee-based company's efforts to lift profits, FedEx leaders are now under pressure to make good on their plans to reduce and streamline the company's inflated and redundant operating structure.
Looking ahead, FedEx expects fiscal 2023 earnings per diluted share of between $12.50 and $13.50 before the MTM retirement plans accounting adjustments.
Moreover, FedEx sees earnings per share between $13 to $14 before the MTM retirement plans accounting adjustments and excluding estimated costs related to business optimization initiatives and realignment activities.
FedEx executive vice president and chief financial officer Michael Lenz said,
"As we look to the second half of our fiscal year, we are accelerating our progress on cost actions, helping to offset continued global volume softness."
