FedEx shares surged more than 15% in after-hours trading on Tuesday following the announcement of impressive financial results for its fiscal fourth quarter. The company exceeded analysts’ expectations in both earnings and revenue.
For the quarter ending May 31, FedEx reported net income of $1.47 billion, translating to $5.94 per share, compared to $1.54 billion, or $6.05 per share, in the same period the previous year. Revenue for the quarter reached $22.1 billion, a slight increase from $21.9 billion year-over-year. However, for the full fiscal year, revenue decreased to $87.7 billion from $90.2 billion.
Capital spending for fiscal 2024 was reported at $5.2 billion, marking a 16% decrease from the previous fiscal year’s $6.2 billion. This figure was also lower than the $5.7 billion forecasted in the company’s fiscal 2024 guidance provided last year.
FedEx anticipates low-to-mid single-digit percentage revenue growth for fiscal 2025 and aims to achieve a permanent $2.2 billion reduction in costs in the following fiscal year. The company is on track to reach its goal of cutting $4 billion in costs by the end of fiscal 2025.
The cost-cutting measures are part of the company’s DRIVE transformation program, initiated due to weak freight demand. FedEx has successfully achieved $1.8 billion in structural cost reductions in fiscal year 2024. CEO Raj Subramaniam stated during the earnings call that the company is progressing towards the $4 billion cost-cutting target and expects an additional $2 billion from the consolidation of its air and ground services.
In April 2023, as part of the DRIVE initiative, FedEx announced the consolidation of its delivery companies Express, Ground, Services, and others into a unified Federal Express Corporation. This new structure will operate under the FedEx brand alongside the existing Freight segment.
