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FedEx (FDX) earnings Q2 2023


FedEx said Tuesday it might cut $1 billion more in costs after weak demand ate into its quarterly profit.

The corporate in September announced cost-cutting measures that included parking planes and shutting some offices within the face of softening global demand. It also raised package-delivery rates. On the time, CEO Raj Subramaniam warned the economy would enter a “worldwide recession.” 

FedEx on Tuesday said it’ll have the option to chop one other $1 billion beyond what it forecast in September, to bring the whole fiscal 2023 savings to $3.7 billion compared with its earlier plan for the 12 months. 

“Our teams have an unwavering concentrate on rapidly implementing cost savings to enhance profitability,” CFO Mike Lenz said in an earnings release. “As we glance to the second half of our fiscal 12 months, we’re accelerating our progress on cost actions, helping to offset continued global volume softness.”

Many of the additional cuts will stem from FedEx’s Express unit, corresponding to additional flight cuts, Lenz said on an earnings call. Other cuts include adjustments within the Ground unit in pick-up and delivery.

The corporate has reduced U.S. domestic flight hours by 6% and international by 7% to date this 12 months. By the top of the fiscal 12 months, FedEx said, it expects to park 11 additional aircraft, mostly wide-body planes.

FedEx shares were up greater than 3% in after-hours trading.

Here’s how FedEx performed in its fiscal second quarter of 2023, compared with Refinitiv consensus estimates:

  • Earnings per share: $3.18 adjusted vs. $2.82 expected
  • Revenue: $22.8 billion vs. $23.74 billion expected

FedEx’s net income fell to $788 million within the three months ended Nov. 30, down from $1.04 billion a 12 months earlier. Sales fell to $22.8 billion in that period, down from $23.5 billion a 12 months earlier, falling wanting estimates.

Adjusting for one-time items, FedEx posted per share earnings of $3.18, ahead of analyst estimates but well off the $4.83 a share it reported through the same period of last 12 months.

The corporate posted particular weakness in its Express unit, with operating income in that segment down 64% from last 12 months. FedEx Ground operating income rose 24% from last 12 months, and FedEx freight operating income increased 32% 12 months over 12 months. All three units were helped by higher yields.

FedEx forecast full-year earnings per share of between $13 and $14, just shy of analysts’ expectations of $14.08 per share.

The corporate’s shares are down about 36% for the 12 months as of Tuesday’s close, compared with the S&P 500’s roughly 20% decline.

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