FedEx Q4 revenue up marginally, net income down 4%
Operating income and margin improved, reflecting lower costs as company continued to execute on its DRIVE programme
FedEx reported a marginal increase in revenue at $22.1 billion for the fourth quarter ended May 31, 2024 but net income was down four percent at $1.47 billion.
"Fourth quarter revenue increased modestly versus the prior year period. Operating income and margin improved, reflecting lower structural costs as the company continued to execute on its DRIVE programme," says an official release.
Raj Subramaniam, President and Chief Executive Officer, FedEx says: "We made significant progress in fiscal 2024 and ended the year strong, delivering four consecutive quarters of expanding operating income and margin in a challenging revenue environment. 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 as we advance our efforts to create the world’s most flexible, efficient, and intelligent network.”
FedEx Ground operating results increased ($1.1 billion) due to reduced structural costs resulting from DRIVE initiatives, increased yield, lower self-insurance costs, and growth in ground commercial volume, the release added.
"FedEx Freight operating results increased due to higher yield and effective cost management. FedEx Freight has announced plans to further optimise its operations and match capacity with demand through the planned permanent closure of seven facilities. FedEx Express operating results declined primarily due to lower international yields, partially offset by reduced structural costs from DRIVE initiatives and higher U.S. domestic package yields. During the quarter, FedEx Express permanently retired certain aircraft and related engines as part of its fleet modernisation programme."
2024 revenue down
FedEx reported a three percent decline in full year revenue at $87.7 billion while net income was $4.3 billion, up 8 eight percent.
"Capital spending for fiscal 2024 was $5.2 billion, down 16 percent from $6.2 billion in fiscal 2023."
During fiscal 2024, FedEx returned approximately $3.8 billion to stockholders through the combination of $2.5 billion of stock repurchases and $1.3 billion of dividend payments, the release added. For fiscal 2025, FedEx expects to repurchase $2.5 billion of common stock, including $1.0 billion during the first fiscal quarter, and previously announced a 10 percent increase ($0.48 per share) in the annual dividend rate on its common stock to $5.52 per share.
"As we advance our transformation, we continue to focus on reducing structural costs and lowering the capital intensity of the business,” says John Dietrich, Executive Vice President and Chief Financial Officer, FedEx. “Improved earnings and enhanced capital discipline enabled us to return $3.8 billion to stockholders during fiscal 2024 while prudently investing in our business and maintaining a strong balance sheet.”
2025 outlook
For fiscal 2025, FedEx is forecasting:
*A low-to-mid single-digit percent revenue growth year over year
*Permanent cost reductions from the DRIVE transformation programme of $2.2 billion; and
*Capital spending of $5.2 billion with a priority on investments in network optimisation and efficiency improvement, including fleet and facility modernisation and automation.
"FedEx management and board of directors are conducting an assessment of the role of FedEx Freight in the company’s portfolio structure and potential steps to further unlock sustainable shareholder value. The company is committed to completing this review thoroughly and deliberately by the end of the calendar year. FedEx will conduct this assessment while continuing to focus on customers, team members and the safety of its operations."
