FedEx posts profit that tops estimates, raises forecast on cost cuts

FedEx Corp. rose in early trading Thursday on profit that topped analyst estimates and an increase to the low end of its earnings forecast. The company credited cost cuts, strong pricing and customers who switched to the courier from its main rival on concern over a potential strike. Adjusted earnings were $4.55 a share for the quarter that ended Aug. 31, FedEx said Wednesday after the close of regular trading in a statement. That’s up from $3.44 a year ago and higher than a prediction of $3.73 from the average of 25 estimates compiled by Bloomberg. Sales fell about 6% to $21.7b; analysts had expected $21.8b. “We started fiscal 2024 with strong momentum as our global transformation actions take hold and drive improved results,” CEO Raj Subramaniam said. FedEx has won over investors in 2023 with a multiyear restructuring plan to cut costs and improve efficiency by $6b, which should help underpin earnings even while package demand declines. FedEx got a boost this quarter from United Parcel Service customers who shifted volume on concern of a potential strike that was resolved only days before an Aug. 1 deadline. FedEx’s Freight unit also picked up some volume from trucker Yellow Corp., which declared bankruptcy in early August. The company raised the lower end of its guidance for annual adjusted earnings per shares to $17 to from $16.50 that it had forecast in June. The company left the top end of its outlook at $18.50. FedEx lowered its outlook for revenue in 2024 to no gain amid “ongoing demand weakness.” Earlier, it had predicted sales would be between no gain and a low-single-digit percentage increase.<br/>