Federal Express Corp. earnings exceeded Wall Street expectations for the fiscal year fourth quarter, with premium business-to-business services driving most of the revenue growth and more than $1 billion in cost savings as a multiyear network restructuring fully takes hold.
The courier giant on Tuesday pointed to strong growth in yields and volumes across its domestic and international parcel and freight products as a positive verdict on the strategy to focus on growing market share in premium markets such as automotive, healthcare, aerospace, data centers and specialized B2C. FedEx (NYSE: FDX) has largely abandoned local, last-mile parcel delivery for e-commerce sellers because the low margins can’t offset the high cost of operating a global multi-modal network.
Revenue increased 13% to $25 billion and adjusted earnings per share of $6.31 was up 4% year over year, but the company’s operating margin contracted to 8.4% from 9.1% as it coped with volatile tariff changes from the Trump administration, the grounding of the MD-11 freighter fleet, uncertainty from the Iran war and rising transportation and labor costs. FedEx and its pilots this month finalized a new contract that increases pay by 40% over the four-year term.
The results were the first issued since FedEx spun off its freight trucking business on June 1. FedEx Freight reports results on Thursday.
FedEx grew full-year revenue by 9% to $94.7 billion and adjusted operating income by 17%. The 7.7% adjusted operating margin was the highest margin rate in four years.
Domestic and international package volumes in the quarter grew 13% versus the prior year period. Package yield was up 11%. In the past two years, FedEx has targeted heavy freight shipments to better utilize its airline capacity. The new focus led to a 12% increase in the average daily pounds for international export freight compared to the same quarter last year.
In Europe, FedEx achieved its twelfth consecutive quarter of revenue gains, which the company attributed to better service levels. CEO Raj Subramaniam said Europe represents the largest opportunity for profit improvement in the cross-border international business.
FedEx is beginning to recoup duties ordered returned by the Supreme Court because the emergency justification used by the Trump administration was deemed unconstitutional. Chief Commercial Officer Brie Carere said FedEx will start passing on refunds to customers in August.
On a calendar-year basis, FedEx said it expects revenue to grow 11% in 2026 with guidance for about $17.50 per adjusted diluted share at the midpoint implying y/y growth of 16%.
FedEx’s stock price was down 3.5 points in after hours trading.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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