FedEx Corp (NYSE:FDX, ETR:FDX) shares moved higher after the package delivery firm unveiled plans to spin out FedEx Freight into a separate public company.
FedEx afterhours on Thursday announced plans to separate FedEx Freight into a standalone publicly traded company in the less-than-truckload (LTL) sector.
The separation, expected within 18 months, is designed to enhance strategic, operational, and financial flexibility for both companies while preserving synergies in key areas.
This move will allow FedEx and FedEx Freight to pursue tailored growth strategies and maintain their commitment to exceptional service in the global parcel and LTL markets, the company believes.
“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” FedEx CEO Raj Subramaniam said in a statement.
“Through this process, we will unlock value for our Freight business and position FedEx to create even greater value for stockholders."
Seperately, FedEx reported earnings per share for the three months ending November 30 of $4.05, topping estimates of $3.93.
Revenue was approximately $22 billion, in line with Wall Street estimates.
The company’s strong quarterly results overshadowed downward revisions to its fiscal 2025 guidance.
FedEx now expects approximately flat revenue year-over-year compared to earlier guidance of a low single-digit percentage increase.
Earnings per share are expected to be in the range of $16.45 to $17.45, compared to its previous forecast of $17.90 to $18.90 per share.
“I remain confident FedEx will continue to grow earnings this year despite the challenging demand environment, as we focus on transforming operations and improving revenue quality,” FedEx CFO John Dietrich said.
“We are resolute in our strategy to prudently manage our capital expenditures, and expect to deliver on our commitment to return $3.8 billion to stockholders this fiscal year.”
Shares of FedEx initially surged almost 10% on the spin-out announcement but pared their gains, trading up 0.6% at $277.50 late morning on Friday.
- Updated with share price movement -