FedEx has recently reported promising quarterly results, prompting an adjustment to its profit forecast for 2026.
On December 18, 2024, FedEx, known for its package delivery services, announced that its second-quarter profits and revenues surpassed Wall Street expectations, largely due to strategic pricing and cost-cutting measures that helped balance out a decline in shipment volumes during the peak season.
The Memphis-based firm revealed an adjusted profit of $1.14 billion, translating to $4.82 per share, for the quarter ending November 30. This marks an increase from last year's profit of $990 million, or $4.05 per share. Analysts had predicted earnings of around $4.11 per share according to data compiled by LSEG, showcasing FedEx's stronger-than-anticipated performance.
After these announcements, FedEx shares climbed by 2.4%, reaching $294 in after-hours trading.
Since 2023, FedEx has embarked on a comprehensive overhaul aimed at reducing operational costs significantly. This initiative includes idling planes, closing various locations, and merging its Ground and Express divisions. The company is now aiming to achieve an additional $1 billion in savings for the fiscal year ending in May 2026.
CEO Raj Subramaniam stated, "We successfully executed our growth strategy and advanced our network transformation while navigating a highly challenging external environment."
Despite these positive developments, the broader economic context poses challenges. U.S. manufacturing contracted for the ninth month in a row as of November, which could lead to reduced shipping volumes for FedEx, particularly since the company heavily depends on business-to-business deliveries linked to industrial activity.
In the recent quarter, the Express segment of FedEx saw improvement due to increased yields from both domestic and international priority packages. However, these gains were somewhat offset by the effects of global trade policy changes and the grounding of its MD-11 aircraft fleet.
Conversely, FedEx Freight, which is slated to spin off on June 1, 2026, experienced declines in its operating results due to decreased shipments and rising wage costs.
Both FedEx and its competitor UPS are often seen as indicators of the global economy, given their extensive reach across various industries and markets.
Looking ahead, FedEx has revised its annual profit projections, now estimating earnings between $17.80 and $19.00 per share, slightly increasing the lower end from its previous forecast of $17.20 to $19.00. This new midpoint also exceeds analysts' average expectation of $18.22 per share.
Additionally, the company has raised its revenue outlook for 2026, now predicting a growth rate of 5% to 6% compared to an earlier estimate of 4% to 6%.
In the second quarter, revenues surged to $23.5 billion, exceeding forecasts of $22.79 billion and extending the company's trend of recovering sales.
FedEx reaffirmed its plans for capital expenditure and cost-saving measures for 2026. The freight division, once spun off, will commence trading on the New York Stock Exchange under the ticker symbol 'FDXF' and will host an investor day in New York City on April 8, 2026.
This report was contributed by Lisa Baertlein from Los Angeles and Abhinav Parmar in Bengaluru, with editing by Alan Barona. Baertlein specializes in global goods movement, focusing on ocean transport and last-mile delivery, while Parmar covers stories related to manufacturing and transportation, enjoying diverse cuisines and outdoor adventures in his free time.
