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    FedEx shares rose more than 13% as investors welcomed a $1.8 billion structural cost reduction

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    Shares of FedEx Corp. rose. By more than 13% in the pre-market session on Wednesday after the company announced significant structural cost cuts for the fiscal year 2024.

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    Investors reacted positively to the news, which is part of FedEx’s broader strategic initiative aimed at boosting efficiency and profitability.

    FedEx’s cost-cutting measures boost confidence


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    FedEx revealed that it reduced $1.8 billion in structural costs for fiscal year 2024. This reduction is a key component of the company’s DRIVE initiative, which aims to achieve an overall cost reduction of $4 billion by the end of fiscal year 2025.

    The successful implementation of these cost-saving measures has been well received by the market, as evidenced by the significant rise in the company’s share price.

    FedEx said that reducing costs associated with supporting Postal Service volume will boost profitability beginning in fiscal 2025 and continuing thereafter.

    “FedEx’s guidance was impressive, especially considering it did not renew its contract with the US Postal Service,” commented Louis Navellier, founder and chief investment officer of Navellier & Associates, an asset management firm that holds FedEx shares in a fund.

    Since taking over from founder Fred Smith two years ago, CEO Subramaniam has been cutting costs and consolidating FedEx’s separate plane- and truck-based delivery units in response to pressure from activist investors.

    Highlights of revenues and capital expenditures


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    For the most recent quarter, FedEx reported revenue of $22.1 billion, slightly exceeding expectations of $22.07 billion. In addition, the company revealed that its capital spending for fiscal year 2024 was $5.2 billion, a 16% decrease from the $6.2 billion it spent in fiscal year 2023.

    That spending also fell below the $5.7 billion projected in the company’s previous 2024 financial guidance.

    Strategic implications and future outlook


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    Reducing capital spending and focusing on cost efficiency is part of FedEx’s strategic plan to streamline operations and improve financial performance. By reducing costs and optimizing spending, FedEx aims to strengthen its competitive position and drive long-term growth.

    As the company continues to implement the DRIVE initiative, investors will look for more evidence of operational improvements and financial gains.

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