(Reuters) -FedEx announced the much-anticipated spinoff of its less-than-truckload freight division on Thursday, as it looks to restructure its operations and focus more on its core delivery business, sending shares in the parcel delivery giant up as much as 10% in after-hours trading.
Analysts believe the spinoff could unlock up to $20 billion in shareholder value while clearing the way for FedEx management to focus on restructuring, potentially boosting long-term growth prospects for its core package operations and what will become a separate freight business.
FedEx Freight is the largest U.S. provider of less-than-truckload services, which involve carrying multiple shipments from different customers on a single truck; the shipments are then routed through a network of service centers where they get transferred to other trucks with similar destinations.
FedEx also said adjusted profit fell to $0.99 billion, or $4.05 per share, in the second quarter, from $1.01 billion, or $3.99 per share, a year earlier. The result from the latest quarter topped analysts’ average call for earnings of $3.90 per share, according to LSEG.
Memphis-based FedEx also lowered its profit outlook for the full year, calling for adjusted profit of $19 to $20 per share. In September, FedEx lowered the top end of its full-year adjusted operating income to between $20 and $21 per share from its previous range of $20 to $22 per share.
(Reporting by Lisa Baertlein in Los Angeles and Abhinav Parmar in Bengaluru; Editing by Alan Barona and Aurora Ellis)
