FedEx has announced plans to spin off its freight division into an independent publicly traded company as part of CEO Raj Subramaniam's ongoing efforts to streamline operations. The announcement came as the company released its second-quarter financial results, revealing intentions to complete the spin-off within 18 months. This move follows previous evaluations of the business, which led to market speculation about a potential spin-off or sale. Bloomberg estimates the freight division's enterprise value to exceed $30 billion.
Following the announcement, FedEx's stock surged over 10% in after-hours trading, although it has only risen about 8% this year, lagging behind the S&P 500's approximate 23% gain. Despite the anticipated transaction, FedEx lowered its full-year earnings forecast, citing continued weak demand in the U.S. The company now projects adjusted earnings per share for fiscal 2025 to be $19 to $20, down from the previous $20-21 estimate. Second-quarter adjusted earnings per share were $4.05, surpassing analysts' expectations of $3.98.
