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FedEx Details Planned Changes During Q2 2025 Earnings
Separation From Freight Division Planned Within 18 Months to Unlock Value
FedEx Corp. posted a decline in net income and a slight dip in revenue for its .
The Memphis, Tenn.-based transportation services company on Dec. 19 reported net income of $740 million, or $3.03 a diluted share, for the three months ending Nov. 30. That compared with $900 million, $3.55, during the same time the previous year. Total revenue decreased about 1% to $22 billion from $22.2 billion.
“Our second-quarter results demonstrate that our efforts to transform our operations are working,” FedEx CEO Raj Subramaniam said. “The Federal Express segment delivered operating profit growth despite several headwinds, including the continued weak U.S. domestic demand environment as well as the expiration of our U.S. Postal Service contract.”
The FedEx Express segment reported operating income of $1.05 billion and a 5.6% margin. That compared to operating income of $1.03 billion during the year-ago period and a 5.5% margin. Business optimization costs for the segment jumped 167% to $206 million from $77 million during the year-ago period.
The report also noted that consolidated operating results were negatively affected by lower-than-expected FedEx Freight revenue and profit, due primarily to sustained weakness in industrial production putting continued pressure on less-than-truckload industry demand. The lower FedEx Freight results were mostly offset by cost reduction benefits at FedEx Express.
The company also announced that its board of directors decided to pursue a full separation of FedEx Freight through the capital markets, creating a new, separately traded public company. The separation will commence immediately and is expected to be executed within the next 18 months.
FedEx also highlighted in its earnings report that it completed $1 billion in share repurchases via open market and accelerated share repurchase transactions during the quarter. The company said that about 3.7 million shares were delivered from the transactions, and noted that the accompanying decrease in outstanding shares was expected to have contributed to the quarterly results. The company expects to repurchase an additional $500 million of common stock during fiscal 2025.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 2 on the TT Top 50 list of the largest global freight carriers. FedEx Logistics ranks No. 34 on the TT Top 100 logistics companies list.
