FedEx Reports Robust Q4 Data with Lower Capital Spending

On Tuesday, FedEx Corporation shares jumped in the after-hours after reporting its fourth-quarter results that beat expected earnings and revenue.

Despite closing at 0.02% to $256.46 apiece on June 25, it gained 13.86% to $292.00 per share in the after-hours session.

Its earnings per share hit $5.41, higher than analysts’ expectations of $5.34 and the $3.86 from the previous quarter.

Moreover, the company’s revenue accumulated $22.10 billion, beating the anticipated $22.05 billion and the last $21.70 billion data.

FedEx said its fiscal 2024 capital spending decreased by 16.00% to $5.20 billion compared to FY2023’s $6.20 billion.

For FY2025, the shipping firm foresees low to mid-single-digit earnings growth year over year. Its Chief Customer Officer, Brie Carere, states that the boost will be driven by e-commerce and low inventory levels.

Moreover, its Q4 profits, excluding items, spiked by 7.20% to $1.34 billion or $5.41 per share. Also, its operating margin rose by 8.50% from 8.10% in the quarter a year ago.

On the other hand, its Express overnight delivery witnessed falling volumes as the US Postal Service (USPS) shifted parcels to more economical ground services. The contract with USPS, accounting for around $1.75 billion in revenue to FedEx, will expire on September 29.

According to experts, the corporation’s outlook was impressive for not renewing its deal with USPS.

DRIVE Initiative by FedEx Aims to Cut Costs

As part of FedEx’s expense-cutting plans, it established its DRIVE transformation to reduce costs and consolidate the business. It aims to lower spending to $4.00 billion by the end of fiscal 2025.

CEO Raj Subramaniam said the initiative continues to revolutionize the way the shipping company works. He added that they reached their FY2024 target of $1.80 billion in structural costs.

The FedEx CEO also stated that the company is progressing toward achieving the $4.00 billion cost-cutting objective. Moreover, it anticipated another $2.00 billion from its plans to solidify its air and ground services.