Fedex To Spinoff Freight Business
Date
12/20/2024 10:09:27 AM
(MENAFN- Baystreet)
Federal Express (FDX) has announced plans to spinoff its less-than-truckload freight division as it pivots to focus on its core delivery service.
Analysts and some large institutional investors have been calling for FedEx to spinoff its freight unit, arguing that it could unlock up to $20 billion U.S. in shareholder value.
The spinoff will also help FedEx to focus on restructuring, potentially boosting long-term growth prospects for its core package operations.
FedEx Freight is the largest U.S. provider of less-than-truckload services, which carry multiple shipments from different customers on a single truck.
The shipments are routed through a network of service centres where they get transferred to other trucks with similar destinations.
News of the freight spinoff accompanied FedEx's latest financial results.
The company reported that its Q3 profit fell to $4.05 U.S. per share in what was its fiscal second quarter. That was above the $3.90 U.S. per share expected on Wall Street.
Looking ahead, FedEx lowered its profit outlook for the full fiscal year, calling for an adjusted profit of $19 U.S. to $20 U.S. per share.
Despite the lowered guidance, FedEx's stock is up nearly 10% on news of the freight spinoff. The company's stock has risen 9% so far in 2024 to trade at $275.88 U.S. per share.
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