FedEx to fold operating divisions into one organization in cost-cutting push
2023.04.05 08:16
© Reuters. FILE PHOTO: A FedEx Ground truck drives near a FedEx regional hub at Los Angeles International Airport (LAX) in Los Angeles, California, U.S., September 16, 2022. REUTERS/Bing Guan
LOS ANGELES (Reuters) -FedEx Corp said on Wednesday it will fold its businesses that move freight and divisions that offer other services into one organization, as the delivery firm steps up efforts to cut costs and increase efficiency across its bloated operations.
Shares of the freight bellwether firm were up 3.2% before the bell as it also boosted dividend by 10%. FedEx (NYSE:), which competes with direct rival United Parcel Service (NYSE:) and Amazon.com (NASDAQ:)’s growing delivery operation, is racing to reduce overhead that has pressured profits as demand for deliveries cools and global recession threatens.
FedEx has previously outlined goals of reducing $4 billion in permanent costs by the end of fiscal 2025 and is scheduled to present more details on their progress at an event on Wednesday.
Executives at the Memphis, Tennessee-based package delivery company said last month 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.
The phased transition announced Wednesday will ultimately bring FedEx Express, FedEx Ground, FedEx Services and other FedEx operating companies into Federal Express Corporation and will be headed by present Chief Executive Officer Raj Subramaniam, the company said.
FedEx Freight will continue to provide freight transportation services as a stand-alone company under the Federal Express Corp banner, the company added.
The transition is expected to be completed by June 2024.
