FedEx Freight Overview - FedEx Freight is a leading North American provider of LTL freight services, offering FedEx Freight Priority, FedEx Freight Economy, and FedEx Freight Direct to meet diverse customer needs [1] - The segment generated 9.4billioninrevenueinFY24andservesvirtuallyeveryU.S.ZIPCode,includingAlaskaandHawaii,withindustry−leadingtransittimes[1]−Internationally,FedExFreightoperatesinCanadaandMexico,offeringcross−borderandintra−countryLTLservices[1]FinancialPerformance−For2Q25,FedExFreightsegmentrevenuewas2.2 billion, down 11.2% YoY, primarily due to lower shipment volumes and reduced yields [14] - Operating income for 2Q25 dropped 36.5% YoY to 312million,withoperatingmargindeclining570bpsto14.34.5 billion, down 6.8% YoY, with operating income falling 22.8% YoY to 751million[15]StrategicSpin−Off−FedExannouncedthespin−offofitsFreightbusinesstocreateanewpubliclytradedcompany,aimingtounlockmarketvalueandachieveapremiumvaluationsimilartocompetitorslikeOldDominionFreightLine[8]−Thespin−offisexpectedtoenhanceoperationalfocus,accountability,andagilityforbothFedExandFedExFreight,withanestimatedenterprisevalueof30-35 billion [8][9] - Post-separation, FedEx Freight will be the largest LTL carrier with a 17% market share and the broadest network in the industry [10] Operational Highlights - FedEx Freight operates nearly 30,000 motorized vehicles from approximately 360 service centers and employs around 40,000 people [20] - The segment has maintained its leading market share position while increasing operating profit by nearly 2% annually over the last five years, with 1,100 basis points of operating margin expansion [10] - FedEx Freight Direct addresses the growing e-commerce market for big and bulky products, offering flexible delivery windows and end-to-end visibility [20] Company-Wide Financials - For 2Q25, FedEx recorded revenue of 21.97billion,down0.91.05 billion [3] - Net income for 2Q25 was 741million,down17.73.03, down 14.6% YoY [3] - For 1H25, FedEx revenue was 43.5billion,down0.72.1 billion [21] Outlook and Initiatives - FedEx revised its FY25 outlook, expecting flat revenue YoY and diluted EPS of 16.45−17.45, excluding MTM adjustments [7][16] - The DRIVE transformation program is expected to create 4billionincostsavingsbyFY25,whileNetwork2.0aimstogenerate2 billion in savings by FY27 [10] - FedEx plans to repurchase an additional 500millionofcommonstockinFY25,bringingthetotalbuybackto2.5 billion [17] Industry Position - FedEx Freight is positioned to benefit from a strong balance sheet and deep customer relationships, maintaining its leadership in the LTL market [10] - The spin-off aligns with FedEx's strategy to reduce capital intensity, increase capital returns, and focus on operational efficiency [10] - FedEx Freight's separation is expected to provide unique investment profiles for both entities, preserving operational and technological synergies [9]
FedEx(FDX) Forbes·2024-12-27 18:02