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FedEx’s (FDX), shares soared in Thursday extended trading after the shipping titan announced its plans to spin out Freight as a stand-alone company.
FedEx has announced the start of the process for separating its Freight division. The separation is expected to be complete within 18 months.
“Through the separation, we believe we will unlock significant value for stockholders,” Raj Subramaniam was the FedEx CEO at the time. “the separation will also enable both companies to benefit from enhanced focus and competitiveness.”
Citi analysts last week said that the spinoff of Freight into a separate company might unlock value for the firm, but also suggested it may not be the most optimal option over the long run.
FedEx announced fiscal second-quarter revenues of $22 Billion, down from 22.17 Billion at the same point last year. Analysts had expected $22.14Billion. The profits also dropped to $741m, down from $900m a year earlier, and missed analysts’ expectations.
After adjusting for $249 million in "business optimization costs," FedEx reported $990 million in adjusted net income, better than the $976.6 million analysts had expected.
FedEx Reduces Full-Year Forecast
FedEx reduced its outlook for the full year, forecasting a revenue increase of 0% to 10%, down from a previous projection that projected 1% or less. It expects earnings per common share between $16.45 and $ 17.45, before adjustments. That’s down from its previous estimate of $17.90-$18.90.
FedEx shares jumped roughly 8% in extended trading following the report's release. They were up about 9% for 2024 through Thursday's close.
UPDATE—Dec. Updated December 19, 2024 to reflect updated share prices and additional information.
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