FedEx Stock Surges After Q4 Results, Cost Cutting Boosts Profit

FedEx Corporation (NYSE: FDX) shares soared in pre-market trading Wednesday following the release of its fourth-quarter and full-year fiscal 2024 results.

The shipping giant reported better-than-expected earnings, driven by aggressive cost-cutting measures and improved operational efficiency. As of 6:26 AM EDT, FedEx stock was up 14.05% to $292.40, marking a significant jump from its previous close of $256.38.

FedEx’s Fourth Quarter and Full-Year Performance

FedEx reported a modest increase in fourth-quarter revenue, rising to $22.1 billion from $21.9 billion a year earlier. Operating income for the quarter climbed to $1.56 billion, up from $1.50 billion in the same period last year. The company’s adjusted operating margin improved to 8.5%, compared to 8.1% in the previous year’s quarter.

For the full fiscal year 2024, FedEx saw a slight decline in revenue to $87.7 billion, down from $90.2 billion in fiscal 2023. However, the company’s cost-cutting initiatives paid off, with full-year operating income increasing to $5.56 billion from $4.91 billion the previous year.

The adjusted operating margin for the year improved to 7.1%, up from 6.0% in fiscal 2023. Full-year diluted earnings per share (EPS) rose to $17.21, with adjusted EPS reaching $17.80, both showing significant improvements over the previous year’s figures.

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FedEx’s Cost-Cutting Measures Drive Profitability in Q4

FedEx’s impressive results can be largely attributed to its aggressive cost-cutting strategy. The company’s DRIVE program, aimed at reducing costs by $4 billion by the end of fiscal 2025, has already yielded $1.8 billion in structural cost reductions in fiscal 2024.

The shipping giant is consolidating its air and ground services into a unified FedEx Corporation, expecting an additional $2 billion in savings from this consolidation.

Other cost-saving measures include the permanent retirement of 22 Boeing 757-200 aircraft and seven related engines, as well as plans to close seven FedEx Freight facilities to optimize operations. Capital spending was reduced to $5.2 billion in fiscal 2024, down 16% from the previous year.

Looking ahead, FedEx forecasts $2.2 billion in cost savings from the DRIVE program in fiscal 2025, as it continues to focus on reducing structural costs and lowering the capital intensity of its business.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.