FedEx beats quarterly estimates ahead of freight unit split
FedEx topped Wall Street forecasts in its fiscal fourth quarter, its final period before FedEx Freight became a separate public company.
By Sofia Marchetti · World Affairs Correspondent
2 min read
FedEx reported fiscal fourth-quarter results Tuesday that exceeded Wall Street’s profit and revenue expectations. The quarter was the company’s last to include its freight arm before FedEx Freight began trading as a separate public company, marking a major change in how investors will measure the delivery company’s performance.
FedEx shares fell about 4% in extended trading after the report, CNBC reported. The results covered the period ended May 31, just before the June 1 spinoff of FedEx Freight.
The company posted adjusted earnings of $6.31 per share, above the $5.96 per share analysts expected, according to a survey by LSEG. Revenue came in at $25.01 billion, also ahead of the $24.04 billion estimate in the LSEG survey.
FedEx said FedEx Freight paid a cash dividend of about $4.1 billion to FedEx Corporation as part of the separation. The freight business is now a standalone publicly traded company under the name FedEx Freight.
Express revenue beats estimates
FedEx Express generated $21.57 billion in revenue for the quarter, FedEx said. That topped the $20.75 billion estimate from StreetAccount.
The company said domestic volume rose 3% from a year earlier. U.S. priority volume also increased 3% year over year, according to FedEx.
For the full fiscal year, FedEx reported $94.7 billion in revenue, up from $87.9 billion in the prior year. The company also said U.S. pricing rose 10%.
Fuel costs increased sharply during the year. FedEx said fuel expense rose to $1.43 billion from $864 million a year earlier, a 66% increase.
New fiscal calendar and outlook
FedEx said it is changing its fiscal year-end date from May 31 to Dec. 31, with the change effective earlier in June. The shift will alter the timing of its future annual reporting periods.
For the full year, the company said it expects revenue to grow 11% from the prior year. FedEx also forecast adjusted diluted earnings per share of $16.90 to $18.10.
CEO Raj Subramaniam said in a company statement that FedEx’s profitable growth strategy is producing results. He said the company is gaining momentum across its global industrial network and expects the FedEx Freight spinoff to support growth, cost reductions and long-term value creation.
The report gives investors an updated view of FedEx before the freight separation changes its financial profile. Future results will reflect a company more centered on its express and delivery network after shedding the freight operation.
This story draws on original reporting from CNBC.