FedEx Corp on Wednesday will lay out the next steps in its plan to slash $4 billion in permanent costs by the end of fiscal 2025.
Executives at the Memphis, Tennessee-based package delivery company last month said they were on track to hit $1 billion in permanent cost cuts this fiscal year ending May 31 - putting FedEx well on its way toward its 2025 goal.
Most of those cost savings have come from FedEx's Express division that offers next-day delivery and contributes the largest share of company revenue. Among other things, FedEx has parked Express planes, retired older MD-11 aircraft and laid off 10% of officers and directors to reduce costs.
The company, which competes with direct rival United Parcel Service and Amazon.com's growing delivery operation, is racing to reduce overhead that has pressured profits as demand for deliveries cools and global recession threatens.
Even with better-than-expected progress on cost controls during the quarter that ended Feb. 28, Express operating margin for that period fell to 1.2% from 4.6% the year earlier.
"The volume and broader economic outlook remain uncertain, and timing for delivery of the remainder of the company's cost savings initiatives is still a bit fuzzy," Stifel analyst Bruce Chan said in a client note last month. (Reporting by Lisa Baertlein in Los Angeles; Editing by Himani Sarkar)