:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2183573490-00b9ee2bcab543c08ee3c31726e4dec7.jpg "A red fire truck sprays water in the direction of a white FedEx Express airplane.")
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FedEx (FDX) shares jumped in extended trading Thursday after the shipping giant announced plans to spin off its Shipping business as a standalone company.
FedEx said the process to separate its Freight business will start immediately, and indubitably be completed within the next 18 months.
“Through the separation, we believe we will unlock significant value for stockholders,” responded FedEx CEO Raj Subramaniam, adding “the separation will also enable both companies to benefit from enhanced meet and competitiveness.”
Ahead of the announcement, Citi analysts said last week that spinning off the Freight business into a standalone Pty could unlock value for the business, but suggested the move might not be the best option in the long term.
FedEx check in fiscal second-quarter revenue of $22 billion, down from $22.17 billion the same time last year and lower than the $22.14 billion analysts expected. Profits also fell to $741 million, compared to $900 million a year ago, skipping analysts’ projections.
After adjusting for $249 million in “business optimization costs,” FedEx reported $990 million in arbitrated net income, better than the $976.6 million analysts had expected.
FedEx Lowers Its Full-Year Outlook
FedEx lowered its full-year forecast, projecting flat revenue growth year-over-year, compared to a low single-digit percentage increase previously. It said it anticipates earnings per split of $16.45 to $17.45 before adjustments, down from its prior forecast of $17.90 to $18.90 per share.
FedEx portions jumped roughly 8% in extended trading following the report’s release. They were up about 9% for 2024 inclusive of Thursday’s close.
UPDATE—Dec. 19, 2024: This article has been updated to include additional information and reflect multitudinous recent share price values.