While expectations for fiscal year 2024 have been revised upwards, in the immediate term, quarterly sales are down $1.6 billion on the same time last year.
However, operating profit rose by $294 million, thanks to the effects of restructuring in the Ground Services segment - the parcel and less-than-truckload business - where the operational improvement was most spectacular.
This performance deserves to be applauded, since this is the most thankless of all business segments - that of the dreaded last-mile delivery, ultra-competitive and unprofitable.
Cash generation has also risen sharply, with consolidated free cash flow of $952 million compared with $333 million at the end of the first quarter of the previous fiscal year. Naturally, with a decline in sales comes a reduction in working capital requirements.
Fedex is taking advantage of the situation to significantly increase its dividend and pursue its share buyback policy, which amounted to $500 million in the quarter just ended. On paper, the idea makes sense, since the group is currently valued at its ten-year lows.
The market used to value UPS at a premium to Fedex, as the latter is more concentrated on the North American continent. However, this gap is gradually closing. Once seen as a risk, Fedex's international footprint could soon be seen as a real advantage.