FedEx Corporation shares surged more than 9% to $299.5 in extended trading after the company announced plans to spin off its less-than-truckload freight division. The company intends to carry out the spinoff through a capital markets transaction, creating two independent, industry-leading public companies. FedEx Freight will continue to pursue its growth strategies as a separate entity.
FedEx reported second-quarter earnings of $4.05 per share, matching Wall Street estimates, and up slightly from $3.99 per share a year ago. However, revenue for the quarter totaled $22 billion, falling short of the consensus estimate of $22.17 billion. The company provided guidance for fiscal 2025 adjusted earnings per share in the range of $19.00 to $20.00, compared with the analyst consensus of $19.75.
FedEx has been undergoing a complex restructuring, involving aggressive cost cutting. The company reported permanent cost reductions from its DRIVE transformation program of $2.2 billion. Shares of rival UPS were also up more than 1%. The separation is expected to be executed in a tax-efficient manner for FedEx stockholders and completed within the next 18 months.