FedEx Announces Programs Targeting $1.7 Billion in Annual Profit Improvement by End of Fiscal 2016
MEMPHIS, Tenn., – FedEx Corp. (NYSE: FDX) today announced programs targeting annual profitability improvement of $1.7 billion during the next three years, with a significant portion of the benefits achieved by fiscal 2015. These profit improvement initiatives do not include ongoing base profit improvements at FedEx Ground and FedEx Freight.
FedEx also announced that David F. Rebholz, president and chief executive officer of FedEx Ground, will retire effective May 31, 2013. Rebholz, who will be 60 at the time of his retirement, has led the company’s FedEx Ground operating unit since 2007 and also serves on the Strategic Management Committee of FedEx Corp. A successor will be named at a later date.
In a keynote speech to FedEx Corp.’s 2012 Investors and Lenders Meeting, Frederick W. Smith, FedEx chairman, president and chief executive officer, also said the company intended to increase its dividends in years to come.
Smith said a significant portion of the profitability improvement will come from cost reductions at FedEx Express and FedEx Services. He added that the profit improvement initiatives, along with the combined strength of FedEx Ground and FedEx Freight, would put FedEx on track to achieving its financial goals.
FedEx executives plan to release further details of the profit improvement initiatives on Wednesday.
To view details of the meeting, go to: http://investors.fedex.com.
Cost reductions under way
Smith said FedEx has many cost reduction activities underway and cited an improved information-technology function as one reason FedEx will be able to meet its goal of reducing costs.
Smith said, “We are revamping the Express cost structure through a combination of cost reductions, efficiency improvements, and service repositioning.”
He cited cost reductions in selling, general and administrative (SG&A) expenses spread throughout the enterprise -- but particularly in FedEx Services and FedEx Express -- and improved information-technology function as additional reasons FedEx will be able to meet its goal of reducing costs.
“Our overall strategy is closely tied to effective yield management,” Smith said. “The key is striking the right balance between volume growth and yield improvements. With slow economic growth, however, the cost reduction programs we will describe tomorrow are also essential to achieve our financial goals.”
Confident of long term success
“We are confident we will deliver the performance to ensure the near- and long-term success of FedEx,” Smith said. “And, we believe we can do this even in low-growth environments for global trade and within the major economies.”
FedEx reaffirms its outlook for fiscal 2013 of $6.20 to $6.60 per diluted share, and second quarter earnings of $1.30 to $1.45 per diluted share. This guidance assumes the current outlook for fuel prices. The outlook does not include any costs or benefits related to the voluntary buyout program announced in August and which will be implemented in the second half of fiscal 2013.
Rebholz to retire
“Dave has done a tremendous job at FedEx Ground,” Smith said. “Under his leadership, FedEx Ground has differentiated itself with industry-leading speed and outstanding service. FedEx Ground has grown rapidly and delivered incredible results during the past several years, and it is well positioned to continue that growth in the years ahead.”
Rebholz began his career with FedEx in 1976 as a part-time employee and moved into management in 1978. Prior to joining FedEx Ground, he spent 30 years with FedEx Express. He held a series of senior leadership positions and was named Executive Vice President, Operations and Systems Support in 1999. In that role, his responsibilities included Air Operations, U.S. Air-Ground and Freight Services, U.S. Ground Operations, Customer Service and Central Support Services. In that capacity, he managed more than half of the corporation’s worldwide employment.
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $43 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 300,000 team members to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit http://news.fedex.com/.
Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, legal challenges or changes related to FedEx Ground’s owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and filings with the SEC.
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