FedEx Stock Jumps 13% Amid Cost-Cutting Success

FedEx experienced a significant surge in its stock price, climbing more than 13% during early trading on Thursday. The boost follows the company's latest earnings report, which highlighted the effectiveness of its cost-cutting measures.

The logistics giant reported a net income of US$1.5 billion (MXN $27 billion) for the recent quarter, a slight increase from the previous year, despite a revenue of US$22.1 billion, which showed a marginal decline. For the full fiscal year, FedEx recorded US$4.3 billion in net income, up from the previous year, on revenues of US$87.7 billion, which saw a slight decrease.

CEO Raj Subramaniam highlighted the achievements on the earnings call, emphasizing the record-high adjusted operating income by ground services for both the fourth quarter and the entire fiscal year. Despite challenges in freight demand, FedEx's Freight segment also managed to increase its operating income, matching last year's high for full-year operating margin.

Subramaniam pointed out the sequential increase in adjusted express operating margin for the quarter, albeit a year-over-year decline as anticipated. He reaffirmed FedEx's commitment to optimizing profitability across its operations, citing ongoing initiatives under the "DRIVE" cost-cutting program.

The company aims to achieve savings of US$5 billion by the end of the fiscal year compared to two years ago, with over US$2 billion expected to be permanent. To this end, FedEx announced significant layoffs, including 2,000 job cuts in Europe, as part of efforts to contribute US$600 million towards its 2025 financial goals. Looking ahead, Subramaniam expressed confidence in FedEx's ability to reach a 10% adjusted operating margin on revenues of US$100 billion.