FedEx revenue decline deepens as weaker demand weighs more on delivery volumes| Investor’s Business Daily

FedEx (FDX) posted a full-year low late Tuesday after delivering a mixed report for its fiscal second quarter. But FDX shares rose in late trading.




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In the release of FedEx’s second-quarter results, CEO Raj Subramaniam praised “rapid progress in our ongoing transformation as we navigate a weaker demand environment.”

The implementation of “aggressive cost-cutting plans” drove earnings in the second quarter, he added. The cost savings helped offset lower delivery volumes at the FedEx Express and FedEx Ground units.


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FedEx Earnings

estimates: Analysts polled by FactSet expected FedEx earnings to fall 42% to $2.81 per share from a year ago. Revenue grew 0.9% to $23.702 billion.

Results: FedEx EPS fell 34% to $3.18. That follows a 21% drop in earnings per share in the previous quarter. Sales fell 2.9% to $22.8 billion.

In the second quarter, revenue increased at FedEx Ground and FedEx Freight (trucking). But operating income was down 64% at FedEx Express due to lower global volumes.

The company said it has identified $1 billion incremental cost savings. It now projects total cost savings of approximately $3.7 billion by 2023.

Outlook: For fiscal 203, FedEx led earnings per share of $13-$14, with the midpoint below consensus at $13.93.

FDX stock

The stock was up 3.9% in late trading. FedEx shares fell 2.6% to 164.35 in today’s regular stock market session, extending a three-day losing streak. FDX stock remains well below its 200-day moving average after falling to a two-year low in September.

UPS (UPS) lost 2.7% on Tuesday and then rose 0.7% in extended trading. Growing competitor Amazon (AMZN) rose 0.3% after four bad days and another Monday low. XPO (XPO) lost 2.7%, undermining the near-converged 50- and 200-day lines.

FedEx Express weighs

In the second quarter, the FedEx Express unit, which represents about 52% of total company sales, saw operating income decline 64% year-over-year due to lower global volumes, the company said. That loss was partially offset by an 8% increase in package revenue.

FedEx Ground, just under 40% of sales, reported a 24% year-over-year increase in operating income. Cost-cutting efforts and a 13% revenue increase drove the gain, which was offset by lower package volumes.

In June, FedEx increased its annual dividend by 53% to $4.60 per share. FDX shares are now yielding 2.8%.

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