Analysts at Oppenheimer provided a review of FedEx Corporation (NYSE:FDX) following the company’s 2022 Investor Meeting, which represents its first Investor Day since 2012.
The company outlined its strategy and introduced its 2025 financial targets. It expects its Express segment's (43% of 2022 adjusted operating income) adjusted operating margin to reach 8%-9% by 2025.
The company is targeting expense reduction via operating a more collaborative/efficient network, introducing Network 2.0, which builds upon its 2020-introduced collaboration between its Express/Ground/Freight segment operating units, and targets a $2 billion annual benefit run-rate by 2027, mainly via fewer stations/P&D route & linehaul efficiencies.
Ground segment’s (35% of 2022 adjusted operating income) adjusted operating margin is expected to reach 11%-12% by 2025 (vs. 8% in 2022) largely via profitable revenue growth from targeted segments/pricing/$1 billion of cost savings from productivity initiatives.
The freight segment’s (22% of 2022 adjusted operating income mix) adjusted operating margin is expected to reach 20%-22% by 2025 (vs. 17.4% in 2022).