Package Delivery Company's Shares Skyrocket After Strong Q3 Earnings and Revamp Strategy
The popular parcel delivery company recently reported a significant increase in earnings, surpassing the expectations of financial market experts. This news came just before the anticipated rush of the holiday season, causing the company's shares to spike by 10% in early market trading.
Strong Q3 Performance
The company's performance during the third quarter exceeded the predictions made by analysts. The company's adjusted earnings per share stood at $1.74, against the expected $1.30. Additionally, the revenue was $21.4 billion, more than the projected $20.83 billion.
For the quarter that ended recently, the company declared a net income of $1.31 billion, or $1.55 per share. This was slightly lower than the $1.99 billion, or $1.80 per share, reported the previous year. After making adjustments for one-time items, including the costs of its restructuring strategy, the company reported a profit of $1.48 billion or $1.74 per share.
For the upcoming fourth quarter, the company predicts its revenue to be around $24 billion with an operating margin of 11% to 11.5%.
Revamp Strategy and Workforce Reduction
Along with the earnings report, the company also shared details of its restructuring plan that had been previously announced. As part of this plan, it reduced its workforce by 34,000 jobs, which was higher than the original estimate of 20,000 job cuts. This was done to reduce its dependence on its largest customer, the online retail giant.
Additionally, the company initiated a sale-leaseback transaction for five properties during the third quarter. This move is a part of its broader strategy, which resulted in a $330 million pre-tax gain from the sale in its supply chain solutions division. The company has so far closed daily operations at 93 of its leased and owned buildings as a part of this initiative.
Positive Outlook
The company announced that its restructuring plan has resulted in $2.2 billion in savings till the end of the third quarter. It is also estimated that the company will achieve a total year-over-year cost saving of $3.5 billion by the year 2025.
The CEO of the company said, "We are executing the most significant strategic shift in our company's history, and the changes we are implementing are designed to deliver long-term value for all stakeholders." She further added, "With the holiday shipping season nearly upon us, we are positioned to run the most efficient peak in our history while providing industry-leading service to our customers for the eighth consecutive year."