FedEx Climbs On FY25 Earnings View, $2.5 Bln Share Buyback; Mulls Options For Freight

FedEx Corp. shares gained nearly 14 percent in the after-hours trading on Tuesday on the NYSE, and is currently up around 13 percent in pre-market activity, after the logistics major issued higher earnings forecast for fiscal 2025 benefited by significant cost cutting measures. In its fourth quarter, earnings declined, yet surpassed the Wall Street estimates.

While announcing the quarterly results, the company also announced $2.5 billion share buyback program for fiscal 2025, including $1.0 billion during the first fiscal quarter.

FedEx further announced its plans to review options for its freight business. An assessment of the role of FedEx Freight in the company’s portfolio structure and potential steps is expected to be completed by the end of the calendar year.

FedEx Freight plans to further optimize its operations and match capacity with demand through the planned permanent closure of seven facilities.

Further, the company sees permanent cost reductions from the DRIVE transformation program of $2.2 billion in 2025.

Looking ahead to fiscal 2025, FedEx is forecasting earnings per share of $18.25 to $20.25 before the MTM retirement plans accounting adjustments, and $20.00 to $22.00 after also excluding costs related to business optimization initiatives.

Analysts on average expect the company to report earnings of $20.91 per share, according to figures compiled by Thomson Reuters. Analysts’ estimates typically exclude special items.

In fiscal 2024, earnings on a reported basis were $17.21 per share, while adjusted earnings were $17.80 per share.

The company also projects a low-to-mid single-digit percent revenue growth year over year.

In its fourth quarter, FedEx earnings totaled $1.47 billion or $5.94 per share, down from $1.54 billion or $6.05 per share last year. Adjusted earnings were $1.34 billion or $5.41 per share for the period, compared to $1.25 billion or $4.94 per share a year ago. Analysts had expected the company to earn $5.35 per share.

Operating income and margin improved, reflecting lower structural costs as the company continued to execute its DRIVE program.

The company’s revenue for the quarter rose 0.9 percent to $22.1 billion from $21.9 billion last year, while the Street was looking for $22.07 billion.

Raj Subramaniam, FedEx president and chief executive officer, said, “These results are unprecedented in this current environment, reflecting our continued execution of our DRIVE initiatives and our resolve to transform FedEx while we deliver outstanding service to our customers. We expect this momentum to continue in fiscal 2025…”

John Dietrich, FedEx executive vice president and chief financial officer, added that the company continues to focus on reducing structural costs and lowering the capital intensity of the business.

FedEx shares closed Tuesday’s regular trading at $256.38, down 0.05 percent. However, in the extended trading, shares gained 13.89 percent.

In pre-market activity today, the shares are currently at $290.22, up 13.20 percent.

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