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FedEx delivers FY2023 fourth-quarter revenue of US$21.9 billion and ends FY2023 with revenue of $90.2 billion
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The fourth-quarter results suffer from demand weakness and cost inflation that are partially offset by cost-reduction and US domestic package yield improvement
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Group introduces FY2024 outlook, including $1.8 billion of DRIVE cost savings
Memphis-based FedEx ended FY23 with revenues of US$90.2 billion after the company’s fiscal fourth quarter ended May 31 contributed $21.9 billion, 10.24% short of its revenue performance a year ago.
The United States’ largest logistics company reported net profit of $3.97 billion for the fiscal year, 3.39% higher than the $3.84 billion it made in fiscal 2022. FedEx announced the results on June 20.
“The solid close to the fiscal year demonstrates the significant progress Team FedEx has made in advancing our global transformation while adapting to the dynamic demand environment,” Raj Subramaniam, FedEx Corp. president and chief executive, said in a statement.
“FedEx is becoming a more flexible, efficient and data-driven organization as we significantly lower our cost structure, drive enhanced profitability, and deliver outstanding service for our customers.”
Subramaniam said the fourth-quarter results demonstrate continued momentum across the business, with operating margins for the period being the strongest of the fiscal year as the company firmly managed its expenses and executed DRIVE initiatives.
The quarter’s results suffered from continued demand weakness and cost inflation that were partially offset by cost-reduction and US domestic package yield improvement.
FedEx Express operating results were hit by lower global volumes, which were partially offset by reduced expenses and higher US domestic yields.
The express delivery subsidiary continues to implement volume-related and structural cost-cutting, including further reductions in flight hours and early retirement of certain aircraft and related assets, to mitigate the impact of demand weakness.
FedEx Ground operating results improved primarily due to higher revenue per package and cost-reductions. These factors were partially offset by lower package volume, higher infrastructure costs and increased other operating expenses.
FedEx Freight operating results weakened primarily due to a drop in shipments and reduced weight per shipment, partially offset by improved revenue quality. It remains focused on cost discipline, with a fourth round of furloughs to match staffing with demand, and a planned permanent closure of 29 facilities to optimize network.
Full-year revenue in fiscal 2023 was $90.2 billion, down 3.53% from $93.5 billion in fiscal 2022, also mainly due to demand weakness and cost inflation. But net profit rose 3.65% to $3.97 billion in 2023 from $3.83 billion in fiscal 2022.
FedEx announced that all FedEx Ground operations and personnel in Canada will transition to Federal Express Canada starting in April 2024 as the group positions the company to address future growth opportunities in the Canadian market more efficiently.
As FedEx ends FY23 solid, it is also making solid progress with Network 2.0, as it has now announced optimization plans to streamline pickup-and-delivery operations across networks in 20 markets.
For fiscal 2024, FedEx is forecasting:
- Flat to low-single-digit-percent revenue growth year over year;
- Earnings per diluted share of $15.00 to $17.00 before the marked to market (MTM) retirement plans accounting adjustments and $16.50 to $18.50 after also excluding costs related to business optimization initiatives;
- Permanent cost reductions from the DRIVE transformation program of $1.8 billion;
- Effective tax rate of about 25% before the MTM retirement plans accounting adjustments; and
- Capital spending of $5.7 billion, with a priority on investments to improve efficiency, including fleet and facility modernization, network optimization and automation.RELATED READ: FedEx consolidates operating companies
