FedEx fiscal 2024 revenue down 2.7%

FedEx reported $87.7 billion in revenue for fiscal 2024, down 2.7% from 2023, on its June 25 earnings call. For its fourth quarter, which ended May 31, FedEx reported a 0.9% year-over-year increase in revenue to $22.1 billion. [caption id="attachment_98387" align="alignright" width="300"] (Courtesy/FedEx)[/caption] “The entire industry faced a challenging demand environment in FY 2024,” FedEx President and Chief Executive Raj Subramaniam said on the call. “Our team focused on what we could control and, as a result, we delivered full-year earnings towards the higher end of our original guidance range, up 19% year over year on an adjusted basis. We did this despite a decline in revenue compared to our initial growth expectations.” FedEx reported adjusted operating income of $1.9 billion for 2024, down 5.6% YoY. FedEx also reported for the year: Diluted earnings per share of $17.21, up 11.2% YoY; FedEx Express revenue of $40.9 billion, down 4.4% YoY; FedEx Ground revenue of $34.3 billion, up 2.2% YoY; FedEx Freight revenue of $9.1 billion, down 5.7% YoY; Express moved an average of 5.5 million packages daily, down 2.1% YoY; and Express moved an average of 20.8 million freight pounds daily, down 12.6% YoY. FedEx reported adjusted operating income of $1.6 billion for Q4, up 13.2% YoY. FedEx also reported for Q4: Diluted earnings per share of $5.94, down 1.8% YoY; FedEx Express revenue of $10.4 billion, up 0.1% YoY; FedEx Ground revenue of $8.5 billion, up 2.4% YoY; FedEx Freight revenue of $2.3 billion, up 1.6% YoY; Express moved an average of 5.4 million packages daily, down 1.1% YoY; and Express moved an average of 21 million freight pounds daily, down 1.3% YoY. FedEx ranks first on Air Cargo Next ’s Freight 50 list of top air cargo carriers, flying 19.5 billion cargo tonne kilometers in 2022. The company ranks 23rd on Air Cargo Next ’s Power 25 list of the top airfreight forwarders, moving 232,100 tonnes of air cargo in 2022. DRIVE for lower costs Q4 revenue increased modestly from Q4 2023, and operating income and margin improved due to lower structural costs because of the company’s DRIVE program, according to the earnings report. The DRIVE program, announced in 2023, aims to drive efficiency, lower overhead and improve digital capabilities. FedEx expects DRIVE to generate $600 million in savings in fiscal 2025 compared with fiscal 2023, according to Subramaniam. “DRIVE continues to change the way we work at FedEx,” he said. “We achieved our target of $1.8 billion in structural costs out in FY 2024, with approximately $500 million from air network and international, $550 million from [general and administrative], and $750 million from surface network. In our air network, structural network transformation and reduced flight hours drove the Q4 savings.” FedEx aims to achieve further cost reductions in its Freight division and plans to better match capacity with demand through the permanent closure of seven facilities, according to the report. FedEx announced in May that later this year it would close service centers in: Chicago Ridge, Ill.; London, Ky.; Kenova, W.Va.; Mount Vernon, Ill.; Wilmar, Minn.; Yuma, Ariz.; and Zanesville, Ohio. It remains unclear whether FedEx is considering selling the Freight division. FedEx Express operating results “declined primarily due to lower international yields, partially offset by reduced structural costs from DRIVE initiatives and higher U.S. domestic package yields,” the report stated. In Q4, Express retired 22 Boeing 757-200 aircraft and seven related engines. Loss of USPS contract The U.S. Postal Service in April awarded an air cargo services contract to UPS that will see the express carrier become the postal service’s primary air cargo provider — a role held by FedEx for more than 20 years. “Our contract with the United States Postal Service will expire on Sept. 29,” Chief Customer Officer Brie Carere said on the earnings call. “After the expiration of the contract, we will implement adjustments for our operations and network that will drive efficiencies and create more flexibility.” FedEx Chief Financial Officer John Dietrich said the contract expiry will create a $500 million headwind for FedEx in fiscal 2025. “We anticipate headwinds from the expiration of that contract to begin in the second quarter starting in October, with this headwind lessening in the second half as we aggressively reduce our postal service-related costs, including our U.S. domestic air network costs,” Dietrich said. Outlook FedEx returned about $3.8 billion to stockholders in fiscal 2024 through $2.5 billion of stock repurchases and $1.3 billion of dividend payments, according to the earnings report. Repurchases during fiscal 2024 totaled approximately 9.8 million shares, or 3.9% of the shares outstanding at the beginning of the fiscal year. For fiscal 2025, FedEx expects to repurchase $2.5 billion of common stock, including $1 billion during Q1. Shares of FedEx ( NYSE: FDX ) were up 15.53% from market open to $296.19 as of market close today. The company has a market capitalization of $72.5 billion.

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