On December 20th, FedEx announced its comprehensive performance for the second quarter of the 2023 fiscal year ending on November 30th. According to the performance report, the company’s total revenue for the second quarter of the 2023 fiscal year was $22.8 billion, a year-on-year decrease of 3%, and its net profit was $815 million, a year-on-year decrease of 37.3%.
Raj Subramaniam, President and CEO of FedEx, said, “The FedEx team urgently needs to make rapid progress in our ongoing transformation while dealing with the weak demand environment.” “Due to the accelerated implementation of positive cost-cutting plans, our second-quarter earnings exceeded expectations.”
The company stated that it is prioritizing quick action to reduce costs in order to keep costs consistent with lower-than-expected business volumes for the 2023 fiscal year. The company has identified an additional $1 billion in cost savings on top of the previously planned savings for September. Therefore, the company currently expects to cut costs by about $3.7 billion in the 2023 fiscal year.
FedEx stated in its performance report that the second-quarter performance of the 2023 fiscal year was constrained by sustained weak demand, particularly in the FedEx Express division. Due to the global decline in freight volumes, FedEx Express’s operating revenue decreased by 64% year-on-year, partially offset by an 8% increase in parcel volume. The division implemented previously planned cost-cutting actions in this quarter to mitigate the impact of the decline in volume, including structural changes to the air network and temporary aircraft grounding.
FedEx Ground’s operating revenue increased by 24% year-on-year, mainly due to a 13% increase in volume and cost-cutting measures. These factors were partially offset by increased procurement transportation costs, reduced parcel volumes, and higher other operating costs.
FedEx Freight’s operating revenue increased by 32% year-on-year, driven by an 18% increase in volume, while partially offset by higher wages and employee benefits and reduced shipping volume. In addition, the division also temporarily allowed some drivers to take leave until early March to match capacity and costs with the reduced demand.
In late September of this year, the company had previously stated that international air freight activity was significantly weak, particularly air freight from Asia. At that time, the company announced lower-than-expected first-quarter results and stated that it would cut costs.