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Good things come in FedEx packages.
FedEx reported quarterly results that topped analyst expectations, and announced a new $5 billion share buyback program.
The shipping and logistics company’s net income climbed 14% YoY to $879 million, up from around $771 million in Q3 2023.
Revenue, meanwhile, fell 2% year over year from $22.2 billion to $21.7 billion. FedEx has faced challenges to maintain its pandemic-era demand, and revenue has decreased for a number of consecutive quarters as a result.
Last year, the company launched a multi-year cost-cutting initiative, called DRIVE, with the intention of generating $4 billion in permanent cost reductions by the end of fiscal 2025. The latest update on those plans? So far, so good.
“FedEx delivered another quarter of improved profitability in what remains a difficult demand environment, reflecting outstanding service and continued benefits from DRIVE,” Raj Subramaniam, FedEx president and CEO, said in a statement.
CFO John Dietrich added in the company’s earnings release that “DRIVE is having a real impact, supporting both operating income growth and margin expansion,” adding that as the company looks ahead, it’s “focused on continuing to deliver on DRIVE and our commitments to support long-term shareholder returns.”
The company plans to reduce its capital spending for fiscal 2024 to $5.4 billion, down from its prior forecast of $5.7 billion, and anticipates permanent cost reductions from the DRIVE program to total $1.8 billion in 2024.
The new buyback program, meanwhile, builds on an existing $0.6 billion available for repurchase under the company’s 2021 authorization, per the report. FedEx anticipates buying back $500 million of stock in Q4, which will bring fiscal 2024’s buyback total to $2.5 billion.
“We are making meaningful progress on our transformation, while strengthening our value proposition and improving the customer experience,” Subramaniam said of the reported quarter.