(Boursier.com) — Like Nike, FedEx successfully passed his entrance exam yesterday in New York. Despite a further decline in the volume of parcels handled, the American delivery giant exceeded analysts’ expectations, supported by price increases and cost reductions. In its second fiscal quarter, the Memphis-based group recorded a net profit of $815 million or $3.18 per share, compared with a profit of $1.3 billion or $4.83 per share a year earlier. Adjusted EPS was $3.18, versus $2.80 consensus. Revenues came out at $22.8 billion, against $23.74 billion of consensus.
FedEx is “making rapid progress in its ongoing transformation while navigating a weaker demand environment,” Chief Executive Raj Subramaniam said. “Our earnings exceeded our expectations in the second quarter thanks to the execution and acceleration of our aggressive cost reduction plans.” The company announced an additional $1 billion in fiscal 2023 savings, bringing the total to around $3.7 billion. The firm will close offices, halt rural Sunday delivery and lay off workers in its freight division.
For the full year, FedEx unveiled a new adjusted EPS target of $13 to $14, excluding pension fund swings and spending on cost-cutting measures. Analysts had expected adjusted earnings of $14.14 per share. Investors had lowered their expectations in September after FedEx withdrew its annual guidance, posted profits well below estimates and promised to cut costs in the face of falling volumes.
FedEx said capital spending is expected to be $5.9 billion for the current fiscal year ending at the end of May, down $400 million from the previous forecast. “As we look to the second half of our fiscal year, we are accelerating our progress on cost reduction, helping to offset continued weakness in global volumes,” said Chief Financial Officer Michael Lenz.
The title took more than 3% in after-hours trading.
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