FedEx earnings to focus on prices, cost-cuts as UPS takes market share

FedEx  (FDX) - Get Free Report shares edged higher in pre-market trading ahead of the package delivery giant's first quarter earnings slated for after the closing bell.

FedEx, which unveiled plans to increase shipping rates and customs clearance fees late last month as part of its ongoing drive to boost its overall profits, is expected to see adjusted earnings for the three months ending in August, the group's fiscal first quarter, come in 8.4% higher than last year at $3.73 per share.

Group revenues, however, are set to slip 6.1% to $21.812 billion, reflecting both the loss of market share to its larger rival, United Parcel Service  (UPS) - Get Free Report and a modest slowdown in international traffic. 

Earlier this summer, FedEx said it sees revenue growth that is flat to last 2023 levels, or growing at a low single-digit pace, with earnings in the region of $15.00 to $17.00 per share.

That forecast, however came prior to its new pricing structure, which kicks-in on January 1 and adds around 6% to domestic U.S. shipping costs. FedEx Freight rates, which focus on heavier items, are set to rise between 5.9% and 6.9%  owing to what the company called "incremental costs associated with the current operating environment."

The group said its ongoing efficiency drive will take out another $1.8 billion in permanent costs cuts over the coming fiscal year, and around $4 billion in total by 2025, adding it will buy back around $2 billion in shares.

FedEx shares were marked 0.12% higher in pre-market trading to indicate an opening bell price of $250.29 each, pushing the stock's year-to-date gain firmly past 41% and valuing the Memphis, Tennessee-based group at just under $70 billion.

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