In order to offset ongoing demand weakness at units like FedEx Express, FedEx increased its full-year earnings forecast.

In contrast to its previous estimate of between $13.00 and $14.00, FedEx now anticipates adjusted earnings per share for fiscal 2023 to range between $14.60 and $15.20. Refinitiv consensus estimates indicate that $13.56 in EPS for the entire year was what Wall Street had anticipated.

“We are holistically adjusting to the cost base on all dimensions and all areas,” said CFO Mike Lenz. “Every dollar is under scrutiny.“

In comparison to Refinitiv, here is how FedEx fared in its fiscal third quarter of 2023:

• Earnings per share: adjusted $3.41 vs. expected $2.73
• Revenue: $22.17 billion versus the anticipated $22.74 billion
• An estimated $22.2 billion in revenue was a 6% decrease from the $23.6 billion in the third fiscal quarter of 2022.

FedEx’s net income for the quarter was $771 million, compared to $1.11 billion for the same quarter a year earlier. FedEx reported per-share earnings of $3.41 after one-time items were taken into account, beating estimates, but significantly below the $4.59 per share it reported for the same period last year.

The business reiterated on Thursday that it anticipates cutting costs by more than $4 billion by the end of the current fiscal year.

“We’ve continued to move with urgency to improve efficiency, and our cost actions are taking hold, driving an improved outlook for the current fiscal year,” CEO Raj Subramaniam said in an earnings release.

FedEx, based in Memphis, Tennessee, announced last month that it would fire 10% of its officers and directors as part of a comprehensive plan to cut costs as consumer demand declines. During the company’s earnings call, Subramanian stated that some staffing-related costs were down 8% from the previous year. According to him, there will be a 25,000-person decrease in U.S. head counts from last year.

In addition to reducing office space and cutting flights, FedEx has also made changes to the Ground unit’s pickup and delivery procedures.

Subramanian said the company saved $1.2 billion on total enterprise costs year over year. FedEx cut back on flight hours this quarter by 8% and salary and benefit costs by 4%.

In the fourth quarter, it intends to park more aircraft, and flight hours are anticipated to fall by double digits.

After cutting back on some domestic pickup and delivery routes and increasing courier productivity, the company anticipates making another $50 million in savings the following quarter.

In order to balance out cooling demand, FedEx increased shipping rates by an average of 6.9% in January. On Thursday, FedEx announced an 11% increase in revenue per shipment during its fiscal third quarter.

The business also stated that it anticipates volume to increase both in the current quarter and the first quarter of the upcoming fiscal year.

On April 5, FedEx is scheduled to give investors an update. The business could also make a statement regarding tense contract negotiations with the union representing FedEx pilots. Although strikes in the industry only happen after a drawn-out and difficult process, pilots unanimously approved allowing the union to authorize one.

(Adapted from BusinessInsider.com)