FedEx (FDX) posted stronger-than-expected fourth quarter earnings Tuesday, while issuing a muted profit forecast for its coming fiscal year, amid what it described as ongoing demand weakness and input cost inflation.
FedEx said adjusted earnings for the three months ending in May, the group's fiscal fourth quarter, came in at $4.94 per share, a 28% decrease from the same period last year that narrowly topped the Street consensus forecast of $4.89 per share. Group revenues, FedEx said, fell 10.2% from last year to $21.9 billion, missing analysts' estimates of a $22.72 billion tally.
Looking into the group's coming fiscal year, FedEx said it sees revenue growth that is flat to last 2023 levels, or growing at a low single-digit pace, with earnings in the region of $15.00 to $17.00 per share, and and $16.50 to $18.50 "after also excluding costs related to business optimization initiatives."
“The solid close to the fiscal year demonstrates the significant progress Team FedEx has made in advancing our global transformation while adapting to the dynamic demand environment,” said CEO Raj Subramaniam.
“FedEx is becoming a more flexible, efficient and data-driven organization as we significantly lower our cost structure, drive enhanced profitability, and deliver outstanding service for our customers," he added.
FedEx shares were marked 3.8% lower in after-hours trading immediately following the earnings release to indicate a Friday opening bell price of $222.90 each.
The group said its ongoing efficiency drive will take out another $1.8 billion in permanent costs cuts over the coming fiscal year, adding it will buy back around $2 billion in shares.
“In fiscal 2023, we delivered the early benefits of FedEx’s cost and efficiency initiatives, powered by our DRIVE program,” said CFO Michael Lenz, who announced he will retire and step down from his role before the end of the year.
“We’re approaching fiscal 2024 with the same level of intensity, maintaining a continued focus on improving profitability to position the company for success in what remains a challenging demand environment," he added.
