Q2 Report on Tap
FedEx is preparing to publish 2Q 2024 results on December 19, at 4:05 p.m. ET. On average, analysts following the company forecast adjusted earnings of $4.19 per share for Q2, which is up 32% compared to the prior-year quarter. The experts are looking for revenues of $22.41 billion for the November quarter.
The company has made good progress in its transformation program focused on consolidating operating divisions — Express, Ground, Freight, and Services into one organization called Federal Express Corporation — to achieve greater flexibility and efficiency. The phased transition is expected to be fully implemented by June 2024. In the most recent quarter, around $130 million was saved as part of the aggressive cost-cutting program, reflecting lower third-party transportation rates, optimized rail usage, and consolidation of sources.
From FedEx’s Q1 2024 earnings call:
“We’re making our global network more efficient primarily through structural flight takedowns and efficiencies at our hubs and source as we rightsize the capacity across the network. In Europe, DRIVE initiatives are on track, and we expect them to gain further traction over the course of the year and into FY ’25… Our DRIVE expectations for this year include the G&A savings we have previously outlined, which we believe will start to ramp in the second half of this fiscal year.”
Mixed Outcome
In the three months ended August 2023, the core Express segment and the smaller Freight division contracted by 9% and 16% respectively, which was partially offset by a 3% increase in Ground revenues. At $21.7 billion, total revenue was down 6%. On the other hand, first-quarter earnings, adjusted for special items, jumped 32% annually to $4.55 per share. Earnings topped expectations while revenues missed, continuing the recent trend.
FedEx’s stock traded lower throughout Wednesday’s session, extending the recent weakness. The value has more than doubled since March 2020.