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FedEx achieves robust second quarter performance with enhanced diluted EPS

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In the latest financial report, FedEx has disclosed a surge in second-quarter diluted earnings per share (EPS) to $3.55 and adjusted diluted EPS to $3.99.

Despite a decrease in revenue, the company exhibited notable improvements in income and margin, with consolidated operating income rising by 9% and adjusted operating income by 17%. These gains were attributed to the effective implementation of the company’s DRIVE program and a sustained focus on service and revenue quality.

Source: FedEx

Raj Subramaniam, President, and CEO of FedEx Corp., highlighted the unprecedented consecutive quarters of operating income growth and margin expansion. He emphasized the company’s progress in transformation amid an uncertain demand environment.

The FedEx Ground segment experienced increased operating income, driven by yield improvement, cost reductions, and higher volumes. Notably, the company completed a $500 million accelerated share repurchase (ASR) transaction during the quarter, further benefiting second-quarter results.

“With demand continuing to pressure the top-line, we are pleased with our ability to deliver stronger operating leverage and improved profitability, enabling us to maintain our fiscal year adjusted earnings outlook,” said John Dietrich, FedEx Corp. executive vice president and chief financial officer.

Looking ahead to fiscal 2024, FedEx anticipates a low-single-digit percentage decline in revenue year-over-year.

The earnings per diluted share outlook stands at $15.35 to $16.85 before retirement plans accounting adjustments, reflecting a positive adjustment compared to the prior forecast. Additionally, the company expects permanent cost reductions of $1.8 billion from the DRIVE transformation program.

Despite uncertainties related to mark-to-market (MTM) retirement plans accounting adjustments, FedEx is committed to its fiscal year adjusted earnings outlook.

The forecasts hinge on the company’s current economic and fuel price expectations, successful completion of planned stock repurchases, and the absence of additional adverse geopolitical developments. FedEx maintains a strategic focus on efficiency improvement, including fleet and facility modernization, network optimization, and automation, with a capital spending plan of $5.7 billion.

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