FedEx’s bottom line gets boost from cost reductions

Fiscal 2024 first-quarter results showed continued demand sluggishness

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FedEx beats estimates as cost cuts offset demand weakness (Photo: Jim Allen/FreightWaves)

FedEx Corp.’s (NYSE: FDX) fiscal 2024 first-quarter results showed year-on-year bottom-line improvement despite continued demand weakness that hit its revenue.

Adjusted diluted earnings per share came in at $4.55, well above the $3.44-per-share figure in fiscal 2023’s first quarter and the $3.73-per-share consensus. Adjusted operating income rose to $1.59 billion from $1.23 billion, and net income increased to $1.16 billion from $905 million. Operating margin expanded to 7.3% from 5.3%.

However, revenue fell to $21.7 billion from $23.2 billion, a reflection of ongoing demand sluggishness. Reinforcing that, the company forecast flat year-over-year revenue growth for fiscal 2024, a change from the prior forecast of flat to low-single-digit growth for the full year.

FedEx Ground, the company’s U.S. ground delivery unit, was the top performer in the quarter. It posted a 59% increase in operating income and a 13% operating margin. The unit was buttressed by yield improvement and cost reductions, with cost per package declining more than 2% due to improved productivity and lower line-haul expense.

FedEx Express, the company’s air and international unit, and its largest, posted an 18% gain in operating income, with a 2% operating margin. Operating cost reductions, which included flight frequency reductions and the parking of freighter aircraft, more than offset a 9% year-on-year revenue decline, FedEx said.

Shares popped more than 5% in after-hours trading Thursday after rising fractionally during the regular session.


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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.

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