To our FedEx stockholders,
Last year, FedEx celebrated 50 years of transforming the world by connecting people and possibilities. This year, we continued to advance our mission by ushering in a new era as one FedEx. FedEx Express, FedEx Ground, and FedEx Services are now one company: Federal Express Corporation.
This foundational change to our internal structure improves efficiency and reduces cost, allowing our teams to move with even greater speed and focus.
The world is rapidly changing, and we are evolving to help our customers compete and win with the world’s smartest transportation and logistics network. Our structure is new, but our spirit is the same — ready and eager to embrace a new day as one team united in purpose and promise to deliver what’s next.
As I reflect on the past year and the challenging demand environment, I am extremely proud of how the FedEx team delivered. This year has shown the true embodiment of our People-Service-Profit culture.
Through continued focus on revenue quality and disciplined execution, FedEx achieved year-over-year operating profit and margin expansion in every quarter of FY24. We lowered our capital intensity, reaching our FY25 target of less than 6.5% CapEx as a percentage of revenue a year early; and with more efficient operations, we returned nearly $4 billion to stockholders through dividends and stock repurchases.
In FY25 we aim to build upon our momentum to create a brighter and more connected future for our customers, team members, and communities.
Changing the way we work with DRIVE
DRIVE is a framework that enables us to see beyond our current state and explore new perspectives, possibilities, and approaches. It has created a rigor that allows us to consistently execute at a high level and rapidly adapt to changing market conditions. We achieved our target of $1.8 billion in structural cost-out in FY24.
Our performance through each and every quarter of FY24 shows the resiliency we are building into our business model. Looking ahead, we are firmly on track to achieve our target of $4 billion of savings in FY25 compared to the FY23 baseline, as DRIVE evolves from a targeted transformation effort to being the foundational framework for how we work.
Winning with digital
Innovation has always been a part of the FedEx DNA. When FedEx founder, Frederick W. Smith, declared over 40 years ago that the information about the package was as important as the package itself, it led to the development of the first system for customers to track their packages. Today, we are innovating with digital to make supply chains smarter for everyone.
The role of supply chains has fundamentally evolved in recent years. What was once a footnote in boardroom discussions has become a strategic imperative for business leaders across the globe.
The FedEx network has unique visibility into a world that connects millions of shippers with hundreds of millions of recipients, exchanging trillions of dollars of goods every year. We are using this data to reimagine our networks and offer better value propositions for our customers.
We are already seeing benefits of our digital solutions. For example, our new weather contingency playbook leverages predictive capabilities to proactively divert storm-bound volumes across our networks. By combining the power of digital insights and predictive analytics with our physical network, we effectively mitigated the impact of the January 2024 winter storm that hit our Express hub in Memphis by shifting Memphis-bound Express volume to Ground or Freight at the origin location. Despite this year's event having a longer impact on Memphis operations compared to a similar weather event in 2023, our network recovered twice as fast.
As our digital platform continues to grow, we will create even greater operational flexibility and efficiency for our customers and for our own enterprise.
Reimagining the future
I want to express my sincere gratitude to both Rob Carter and Mark Allen for their remarkable careers in light of their upcoming retirements. Rob has been a part of FedEx for the last 31 years, serving as CIO for the last 24 years, where he led FedEx in modernizing our IT infrastructure. I’m immensely grateful to Rob for his numerous contributions in establishing FedEx as an innovative, data-driven and a people-focused company. We thank him for his dedication and service to FedEx over the years.
Mark has had a distinguished 42-year career with the company. He was named to his current role in 2017 and was a key member of the leadership team as we navigated the unprecedented challenges of a global pandemic, uncertain economy, and a wide variety of critical issues. His leadership and steady guidance of the legal, regulatory, governmental affairs, and security teams through an evolving landscape has helped lay the groundwork for a strong future as one FedEx. We wish Rob, Mark, and their families health and happiness in their next chapters.
This is one of the most pivotal moments in FedEx history. We have the right team and the right strategy to achieve our long-term financial goals, and I have never been more confident in our direction.
We have a long runway of value creation opportunities in front of us as we continue to win profitable share, reimagine our network, and harness the power of the data we generate moving 15 million packages globally each day.
I am excited about the opportunities ahead as we continue to focus on enhancing our profitability and stockholder returns, while providing outstanding service for our customers. And we are doing this the right way, with an utmost focus on safety, using our networks for good, and building towards a more sustainable future.
We are writing a new chapter for FedEx, and we will get there through our incredible culture and people – who always deliver and inspire what’s next.
Sincerely,
RAJ SUBRAMANIAM
President & CEO, FedEx Corporation
See “Forward-Looking Statements” and “Risk Factors” on pages 24-37 of the FY24 FedEx Corporation Annual Report on Form 10-K, included herein, for a discussion of potential risks and uncertainties that could materially affect our future performance.