US logistics and delivery company FedEx $FDX+0.0% has released its quarterly results. Investors were pleased with the year-on-year growth in operating profit, which rose mainly due to lower fuel costs.
The company generated revenue of $21.681 billion in 1Q fiscal 2024. This is a year-on-year decrease of 7%. The company's revenue is contributed by 3 segments, namely ground transportation, express delivery, and freight.
The Express Delivery segment is the largest contributor to revenue, posting a 9% year-on-year decline in revenue to USD 10.1 billion in the quarter.
Investors were positively impressed with the freight segment, where the company recorded a 3% year-on-year revenue growth to USD 8.4 billion.
Although revenue was down year-on-year, operating profit was up 24.7% year-on-year to USD 1.485 billion. This was primarily due to a decline in fuel costs, which fell from USD1.822bn to USD1.101bn year-on-year. The company also saw a decline in purchased transportation costs, specifically from USD5.767bn to USD5.036bn. Investors were also pleased with a decline in package costs in the ground transportation segment, which fell by over 2% year-on-year.
The company recorded a net profit of USD 1.078 billion.
Outlook for fiscal year 2024
The company projects adjusted earnings per share in the range of $17.0 to $18.5. The original projection was for adjusted earnings between USD 16.5 and USD 18.5. The company expects the effective tax rate to be 25% and capital expenditures to reach USD 5.7 billion. Revenues are expected to be at approximately similar levels to fiscal 2023. The original projection assumed flat to low single-digit revenue growth year-over-year. The company also projects that it will return USD 3.3 billion of capital to shareholders in fiscal 2024. Of this, $2.0 billion will be attributable to share repurchases and $1.3 billion will be paid out in dividends.