In its latest financial update, FedEx reported higher full-year diluted earnings per share (EPS) of $17.21 and adjusted diluted EPS of $17.80.
According to the company, fourth quarter revenue increased modestly versus the prior year period. Moreover, operating income and margin improved, which is said to be reflective of the lower structural costs brought about through its DRIVE program.
Commenting on the figures, Raj Subramaniam, FedEx Corp. president and chief executive officer, said:
“We made significant progress in fiscal 2024 and ended the year strong, delivering four consecutive quarters of expanding operating income and margin in a challenging revenue environment. These results are unprecedented in this current environment, reflecting our continued execution of our DRIVE initiatives and our resolve to transform FedEx while we deliver outstanding service to our customers. We expect this momentum to continue in fiscal 2025 as we advance our efforts to create the world’s most flexible, efficient, and intelligent network.”
However, beyond FedEx financial results themselves, one of the talking points in FedEx’s statement concerned the future of FedEx Freight.
The figures show that FedEx Freight operating results increased, which is said to be due to higher yield and effective cost management. Moreover, FedEx stated that FedEx Freight “has announced plans to further optimise its operations and match capacity with demand through the planned permanent closure of seven facilities”.
Despite this, as part of the next phase of FedEx’s long-term stockholder value-creation plans, the company stated that its management and Board of Directors “are conducting an assessment of the role of FedEx Freight in the company’s portfolio structure and potential steps to further unlock sustainable shareholder value”.
“The company is committed to completing this review thoroughly and deliberately, by the end of the calendar year. FedEx will conduct this assessment while continuing to focus on customers, team members, and the safety of its operations,” says the financial statement.
As reported by Bloomberg, the announcement pushed up FedEx’s share price as much as 15% thanks to the chance of a windfall and FedEx becoming a “more pure-play package delivery and logistics company”.
In the aforementioned Bloomberg report, columnist Thomas Black claimed that XPO would likely be suitors, and added that there would be “lots of interest”.
“XPO bought the most assets from the bankruptcy of Yellow Corp., and its chairman, Brad Jacobs, has made his career by snapping up companies. A spinoff would be most efficient on the tax side. Private equity can’t be ruled out. There will be lots of interest. Investors will be sorely disappointed if a deal doesn’t materialize,” said Black.