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Nov 30, 2023
FedEx Q2 2024 Earnings Report
FedEx's Q2 2024 earnings improved despite lower revenue, driven by the DRIVE program and focus on service quality.
Key Takeaways
FedEx reported improved second-quarter earnings with operating income up by 9% and adjusted operating income up by 17%, despite a decrease in revenue. The company's DRIVE program and focus on service and revenue quality were key factors. FedEx expects a low-single-digit percentage decline in revenue year over year.
Operating income increased by 9% and adjusted operating income increased by 17% despite lower revenue.
FedEx Ground operating income increased due to yield improvement, cost reductions, and higher volumes.
FedEx Freight operating income increased despite a decline in revenue, driven by higher yield and increased efficiency.
Completed a $500 million accelerated share repurchase transaction during the quarter.
Forward Guidance
FedEx expects a low-single-digit percentage decline in revenue year over year. Earnings per diluted share of $15.35 to $16.85 before the MTM retirement plans accounting adjustments. Earnings per diluted share of $17.00 to $18.50 before the MTM retirement plans accounting adjustments after also excluding costs related to business optimization initiatives. Permanent cost reductions from the DRIVE transformation program of $1.8 billion. ETR of approximately 25% prior to the MTM retirement plans accounting adjustments; and Capital spending of $5.7 billion.
Positive Outlook
- Earnings per diluted share of $15.35 to $16.85 before adjustments.
- Earnings per diluted share of $17.00 to $18.50 before adjustments after excluding business optimization costs.
- Permanent cost reductions from DRIVE program of $1.8 billion.
- ETR of approximately 25% prior to adjustments.
- Capital spending of $5.7 billion to improve efficiency.
Challenges Ahead
- A low-single-digit percentage decline in revenue year over year.
- Unable to forecast the fiscal 2024 mark-to-market (MTM) retirement plans accounting adjustments.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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