FedEx Corp (NYSE:FDX) stock rose 3.97% (As on September 21, 11:34:15 AM UTC-4, Source: Google Finance) after the company reported a mixed set of results for its first fiscal quarter. The results showed that FedEx has continued to experience benefits from its DRIVE initiatives, which, along with increased volumes from diverted freight and effective cost management, contributed to its overall solid performance. FedEx Express operating income increased 18% during the quarter, as a 9% decline in revenue was more than offset by reduced operating expenses. Cost reductions and transformation efforts that benefited the quarter included structural flight reductions, the alignment of staffing with volume levels, parking aircraft, and shifting to one delivery wave per day in the U.S. FedEx Ground operating income increased 59% during the quarter primarily due to yield improvement and cost reductions. Cost per package declined more than 2%, driven by lower line-haul expense and improved dock and first- and last-mile productivity. FedEx Freight operating income decreased 26% during the quarter driven by lower fuel surcharges and shipments, partially offset by base yield improvement. FedEx Freight completed the planned closure of 29 terminal locations during August.
FDX in the first quarter of FY 24 has reported the adjusted earnings per share of $4.55, beating the analysts’ estimates for the adjusted earnings per share of $3.70. The company had reported 6.5 percent decline in the adjusted revenue to $21.68 billion in the first quarter of FY 24, missing the analysts’ estimates for revenue of $21.84 billion. Further, FedEx reported an increase of around 400,000 to its average daily volume by the end of August, which indicated that it had successfully captured some of the diverted package traffic from UPS. FedEx also said it added about 5,000 average daily shipments following the bankruptcy of Yellow.
FedEx now expects full-year EPS in a range of $17.00 to $18.50, up from the prior forecast of $16.50 to $18.50. The new midpoint of $17.75 came in ahead of the average analyst estimate of $17.50.
On the top line, FedEx anticipated flat YoY revenue, an improvement compared to the prior forecast of flat to low-single-digit-percent revenue growth. The shipping company reiterated its guidance that sees $1.8 billion in permanent cost reductions from its DRIVE transformation program.
FedEx also expects to buy back an additional $1.5 billion in stock during fiscal 2024 after saying it completed a $500 million accelerated share repurchase transaction during the quarter. Cash on hand as of August 31 was $7.1 billion.