FedEx Q2 2024 Earnings Report
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.
FedEx
FedEx
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.
- It is reasonably possible that the fiscal 2024 MTM retirement plans accounting adjustments could have a material effect on fiscal 2024 consolidated financial results and ETR.
- Economic conditions in the global markets.
- Changes in fuel prices or currency exchange rates.