FedEx (FDX) posted quarterly earnings and revenue ahead of Wall Street forecasts as aggressive cost-cutting and resilient U.S. parcel demand helped blunt the impact of weaker international volumes after Washington ended tariff exemptions on low-value imports.
Shares of the Memphis-based shipper rose 5% in premarket trading Friday, surprising analysts who had expected earnings to dip following the expiration of “de minimis” rules that allowed shipments under $800 to enter the U.S. duty-free.
For the quarter ended Aug. 31, FedEx’s international average daily export volume fell 3%, but total average daily shipments — including domestic parcels — rose 4%, and revenue per package increased 2%. The company said it is executing a $1 billion cost-saving plan for the fiscal year ending May 2026, parking planes, shuttering facilities and consolidating operations to trim billions in expenses.
Those measures helped lift profitability. Operating margin improved to 6% from 5.2% a year ago, supported by a 5% jump in domestic average daily delivery volume, reflecting steady U.S. consumer spending despite inflation worries and rising joblessness.
FedEx reported adjusted profit of $912 million, or $3.83 per share, up from $892 million, or $3.60 per share, in the year-ago period. Analysts had forecast $3.59 a share, according to LSEG. Revenue rose to $22.24 billion, beating expectations of $21.66 billion.
Trade policies are weighing on results. The end of the “de minimis” exemption for China and Hong Kong reduced first-quarter revenue by about $150 million — a hit Chief Customer Officer Brie Carere said will recur each quarter this year, contributing to an expected $1 billion annual headwind. “That is predominantly an impact of top-line revenue reduction, because China to the U.S. is a very profitable lane for us,” she said.
The U.S. ended exemptions for packages from China and Hong Kong on May 2 and extended the change to all other countries Aug. 29. Those shipments had accounted for roughly three-quarters of the 1.4 billion packages that entered the U.S. each year under the program.
Looking ahead, FedEx guided full-year adjusted earnings to a range of $17.20 to $19.00 per share, slightly below the analysts’ average estimate of $18.21 at the midpoint.
The company also said it repurchased $500 million of its own stock during the quarter and remains on track to spin off its freight segment by June 2026.
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