MEMPHIS, Tenn. – FedEx Corp. (NYSE: FDX) has released its consolidated results for the first quarter ending on August 31, 2023, marking a strong start to fiscal year 2024.
Raj Subramaniam, President, and CEO of FedEx Corp, expressed optimism, stating, “We started fiscal 2024 with strong momentum as our global transformation actions take hold and drive improved results. FedEx Ground had an outstanding quarter which, when combined with improved earnings at FedEx Express and expense controls across the organization, led to our better-than-expected overall financial performance. FedEx is well-positioned to continue to deliver improved profitability while becoming an even more flexible, efficient, and data-driven organization.”
The positive results for the first quarter were primarily attributed to the successful execution of the company’s DRIVE program initiatives and a steadfast focus on revenue quality. While these efforts improved operating results, there remained some challenges associated with ongoing demand weaknesses.
FedEx Express reported an 18% increase in operating income for the quarter. This increase was achieved despite a 9% decline in revenue, as reduced operating expenses more than offset the revenue decrease. Key contributors to this success included cost reductions and transformation efforts, such as structural flight reductions, staffing alignment with volume levels, aircraft parking, and shifting to a single daily delivery wave in the United States.
FedEx Ground also delivered robust results, with operating income increasing by 59% during the quarter. This impressive growth was driven by improvements in yield and cost reductions. Notably, cost per package decreased by over 2%, driven by reduced line-haul expenses and enhanced productivity in dock and first- and last-mile operations.
However, FedEx Freight experienced a 26% decrease in operating income during the quarter. This decline was primarily attributed to lower fuel surcharges and shipments, although it was partially offset by base yield improvement. In August, FedEx Freight successfully completed the planned closure of 29 terminal locations.
During the quarter, FedEx executed a $500 million accelerated share repurchase (ASR) transaction, leading to the delivery of 1.95 million shares under the ASR agreement. This reduction in outstanding shares positively impacted first-quarter results by $0.02 per diluted share. FedEx anticipates repurchasing an additional $1.5 billion of common stock during fiscal year 2024. As of August 31, 2023, the company had $7.1 billion in cash on hand.
FedEx’s strong performance in the first quarter underscores its commitment to transformation and efficiency, positioning the company for continued growth and profitability in the evolving global logistics landscape.
