FedEx (NYSE:FDX) experienced a significant boost in pre-market trading, with shares rising over 7% following the announcement of a strategic move to spin off its less-than-truckload (LTL) freight division. This decision aims to establish two independent, market-leading public companies, allowing each to focus on its unique growth opportunities and operational strengths.
The spinoff is designed to capitalize on evolving market dynamics in the LTL segment, positioning the standalone FedEx Freight to better address sector-specific challenges while enabling FedEx to sharpen its focus on its core delivery and logistics operations. The separation is set to be executed in a tax-efficient manner for shareholders and is expected to be finalized within 18 months.
FedEx’s second-quarter results showcased mixed performance. The company reported earnings of $4.05 per share, in line with market expectations and slightly ahead of the $3.99 reported a year earlier. However, revenue for the quarter came in at $22 billion, missing the $22.17 billion analyst consensus.
Looking ahead, FedEx provided fiscal 2025 earnings guidance, projecting adjusted earnings per share between $19.00 and $20.00, compared to the consensus estimate of $19.75. The company remains committed to improving profitability through its ongoing restructuring efforts.
As part of its DRIVE transformation program, FedEx has achieved $2.2 billion in permanent cost reductions, emphasizing efficiency and financial discipline. This complex restructuring aligns with the company’s broader strategy to adapt to shifting market conditions while delivering long-term value for shareholders.