FedEx Predicts Profit Growth Under New CEO Subramaniam’s Three-Year Plan
FedEx Corp. thinks it can increase earnings per share by up to 19 percent per year over the next three years by focusing on "high-value" customers and making its networks run more efficiently.
The three-year plan is the first strategic plan made by the company's new CEO, Raj Subramaniam. It calls for annual sales growth of up to 6%, even though demand for packages
Is starting to slow down after growing quickly at the beginning of the pandemic. On June 1, Subramaniam took over as CEO from Fred Smith,
Who started the company. Smith is still in charge as executive chairman.
According to a statement released on Wednesday, the company will also cut capital spending to less than or equal to 6.5% of revenue.
This is a sign that FedEx will focus more on increasing profit margins than on increasing sales. FedEx thinks that its adjusted operating profit margins will be 10% over the next three years.
FedEx's new boss makes decisions in front of the company's founder and an activist.
Subramaniam will have to lead FedEx through the economy after the pandemic, when people are spending more on services and in stores.
This slows e-commerce growth. The courier's strong pricing power has increased revenue per package by 23% for express and 19% for ground in the past three years.
Subramaniam's approach complements recent firm improvements, such as a 53% dividend hike, a vow to minimise capital spending and an agreement with an activist investor to appoint two new board members
FedEx shares rose less than 1% at 8:06 a.m. in New York.
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