© Reuters. FILE PHOTO: A Federal Express truck is shown in Los Angeles, California, U.S., October 16, 2019. REUTERS/Mike Blake/File Photo
By Lisa Baertlein
(Reuters) -FedEx tightened its fiscal 2024 profit forecast on Thursday, raising the bottom end and lowering the top, as share buybacks and cost cuts offset a decline in demand from its largest customer, the U.S. Postal Service (USPS).
Shares of the second-largest parcel delivery firm jumped 12% in after-hours trading.
The company now expects fiscal 2024 earnings in the range of $17.25 to $18.25 per share, compared with its prior forecast of $17 to $18.50 per share.
Adjusted profit for the quarter ended Feb. 29 rose to $966 million, or $3.86 per share, from $865 million or $3.41 per share a year earlier. Share buybacks boosted profit in the latest quarter by 9 cents per share.
FedEx (NYSE:) reported quarterly revenue of $21.7 billion, down from $22.2 billion last year.
Operating margin in its largest unit, Express, rose to 2.5% from 1.2% a year ago even as revenue declined by 2%.
The Express overnight delivery unit had been struggling with falling volumes as the USPS shifts packages from higher-margin air services to more economical ground services.
Investors are also pressuring FedEx CEO Raj Subramaniam to improve profitability at air-based Express as it undergoes contract renewal talks with USPS and labor discussions with its pilots.
FedEx said it plans to buy back $500 million worth of its shares in the current quarter, and also said its board of directors approved a new $5 billion share repurchase program.