About Rajesh Subramani
At the CNBC Evolve Global Summit in November 2023, Subramaniam discussed the company's ongoing transformation, which he described as integrating its air, ground, and trucking businesses into a single entity. He attributed the need for this change to the growth of e-commerce, noting that the shift from business to residential deliveries required operational and technological adaptation. Subramaniam stated that despite a decline in volumes, FedEx's operating profit increased for the first time in the company's history, which he credited to the team's focus on efficiency and the strengthening of the company's "people, service, profit" culture.
In June 2022, at FedEx's first investor day in a decade, Subramaniam outlined a three-step plan to achieve double-digit operating margins, balanced revenue growth, and improved asset intensity, targeting a total shareholder return of 8% to 22%. He cited projections of 14% to 19% EPS growth and a 53% dividend increase as signals of confidence in the company's financial position. Subramaniam also addressed labor pressures, stating that the company had addressed routing inefficiencies and wage rate challenges, and that the labor market had become "strong but stable."
Source: AI-verified profile updated from Rajesh Subramani's recent appearances.
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Transcript (10 segments)
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Rajesh Subramani0:13
Ahead of your first investor day in a decade.
It's great to be with you in the great city of Memphis, Tennessee. We are very excited to host investors here today. The plan is very straightforward. We have a three-step plan. We're going to drive operating margins to double digits, we're going to achieve balanced revenue growth and improve our asset intensity by 200 basis points. Overall, we aim to drive a total shareholder return of 8% to 22%. It's the 50th year of FedEx. We've built the asset base quite strongly, and now it's time to adjust the debt-to-EBITDA ratio.
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Interviewer1:15
Your previous target was about 20%. Your dividend has really gotten investors excited. You announced a 53% increase.
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Rajesh Subramani1:23
It signals a confidence in where we think our business is, and where we're going forward. The projections that we think would generate cash flow, and the priorities of investing back into the business, but there's enough cash flow for us to drive back to shareholders and dividends.
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Interviewer1:45
One of the things you mentioned on the earnings call was source pressure. Part of your plan going forward and your vision of the company going forward is to expand those margins. Is labor the biggest issue?
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Rajesh Subramani2:10
And it's in two ways. One was the fact that inefficiency of our routing and secondly the wage rate. We have essentially taken care of the inefficiencies and the wage rate is now in our numbers. We have dealt with it head on, and the margin conversations that we're talking about in the future assume that that's in our numbers. So we're going to improve.
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Interviewer2:37
Overall, over the long term, going through the fiscal targets, how do you source labor at a better price? Where do you see the labor market going forward?
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Rajesh Subramani2:51
At this point, the labor market is strong but stable, stabilized.
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Interviewer3:10
That was the big headline from your last quarter. You saw big increases through all three of your segments, freight having the biggest, with 28, but what drove the pricing increase? Is that demand? A lot of your customers wanting to know that they can get some of your capacity?
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Rajesh Subramani3:29
There are several factors here, Frank. Firstly, the overall global capacity, FedEx plays a big role now in moving international trade. Secondly, we are critical infrastructure for e-commerce. So, you know, there is a very important value that is applied to all e-commerce providers. And, you know, we also are being quite selective in some of the...
