FedEx Q2 revenue down 3%, outlook muted

FedEx reported a 3% decline in adjusted revenue at $22.2 billion for the second quarter ended November 30, 2023, driven by volume declines at Express and Freight. Operating income, however, increased 17% to $1.42 billion and adjusted diluted earnings per share increased to $3.99 from $3.18 in the second quarter of fiscal 2023.

FedEx has delivered an unprecedented two consecutive quarters of operating income growth and margin expansion even with lower revenue. We are moving with speed to make our network more efficient while delivering outstanding service to our customers through the peak season. I am confident in our strategy as we make our global network more flexible, efficient, and intelligent:Raj Subramaniam, FedEx

FedEx Express revenue declined 5% to $10.3 billion and operating income was down 60% to $137 million, driven by volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. That was partly due to falling volume from the U.S. Postal Service, which has been shifting more packages from higher-margin air services to more economical ground services.

FedEx Ground operating income increased 50% to $900 million, primarily due to yield improvement, cost reductions and higher volumes. Cost per package declined two percent, driven by lower line-haul expense and improved first- and last-mile productivity.

With demand continuing to pressure the top-line, we are pleased with our ability to deliver stronger operating leverage and improved profitability, enabling us to maintain our fiscal year adjusted earnings outlook. These results are a testament to DRIVE initiatives taking hold: John Dietrich, FedEx

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