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Nov 30, 2022
FedEx Q2 2023 Earnings Report
FedEx's earnings exceeded expectations due to aggressive cost reduction plans, despite a weaker demand environment.
Key Takeaways
FedEx Corp. reported consolidated results for the second quarter ended November 30, 2022. Revenue was $22.8 billion, operating income was $1.18 billion, and net income was $788 million, with a diluted EPS of $3.07.
Earnings exceeded expectations due to execution and acceleration of aggressive cost reduction plans.
Second quarter results were constrained by continued demand weakness, particularly at FedEx Express.
FedEx Express operating income declined 64% year-over-year, while FedEx Ground operating income increased 24% year-over-year.
FedEx Freight operating income increased 32% year-over-year, driven by an 18% yield increase.
Forward Guidance
FedEx expects earnings per diluted share of $12.50 to $13.50 before mark-to-market retirement plans accounting adjustments and capital spending of $5.9 billion.
Positive Outlook
- Earnings per diluted share of $12.50 to $13.50 before the MTMretirement plans accounting adjustments
- Earnings per diluted share of $13.00 to $14.00 before the MTMretirement plans accounting adjustments and excluding estimated costs related to business optimization initiatives and business realignment activities
- ETR of 25% to 26% prior to the MTM retirement plans accounting adjustments
- Capital spending of $5.9 billion, down from the prior forecast of $6.3 billion.
- These forecasts assume the company’s current economic forecast and fuel price expectations, no additional COVID-19-related business restrictions, and no additional adverse geopolitical developments.
Challenges Ahead
- FedEx is unable to forecast the fiscal 2023 mark-to-market (MTM) retirement plans accounting adjustments.
- As a result, FedEx is unable to provide a fiscal 2023 earnings per share or effective tax rate (ETR) outlook on a GAAP basis and is relying on the exemption provided by Item 10(e)(1)(i)(B) of Regulation S-K.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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