FedEx hikes 2023 earnings forecast as cost-cutting initiatives bear fruit

FedEx on Thursday hiked its full-year earnings forecast as it said cost-cutting measures offset continued demand weakness at units including FedEx Express.

FedEx now expects adjusted earnings per share for fiscal year 2023 of between $14.60 and $15.20, up from a prior forecast of between $13.00 and $14.00. Wall Street had expectated full-year EPS of $13.56, according to Refinitiv.

The company’s stock popped 8% in after-hours trading.

Here’s how FedEx performed in its fiscal third quarter of 2023, compared with Refinitiv consensus estimates:

• Earnings per share: $3.41 adjusted vs. $2.73 expected
• Revenue: $22.17 billion vs. $22.74 billion expected

Adjusting for one-time items, FedEx posted per-share earnings of $3.41, which beat estimates but marked a dramatic year over year decline from the $4.59 per share it reported for the same time period last year.

Last month, Memphis-based FedEx said it would lay off 10% of its officers and directors to reduce costs while consumer demand cools. The company announced it aimed to cut about $3.7 billion during this fiscal year. That included cutting flights and grounding planes, reducing office space and adjustments in the Ground unit in pick-up and delivery, the CFO Mike Lenz said on the company’s second-quarter earnings call.

FedEx raised its shipping rates by an average of 6.9% in January to offset a slowdown in consumer demand. 

FedEx is expected to update investors at an April 5 event. The company could also comment on tense contract negotiations with its FedEx pilots’ union. Pilots unanimously approved allowing the union to authorize a strike, though strikes include a lengthy and complicated process in the industry.

This is a developing story. Check back for updates.