(UPDATED: Feb. 12, 5 p.m. ET)
FedEx Corp. on Thursday announced fiscal year 2029 financial targets of 4% compound annual revenue and $8 billion in adjusted operating income, continuing to prioritize premium growth in high-margin verticals in the industrial economy, digital and AI capabilities, further transformation of its shipping network, and making efficiency gains permanent.
Compared to the midpoint outlook of $85 billion for the current fiscal year, FedEx (NYSE: FDX) expects to achieve $98 billion in annual revenue with a 14% growth in compounded adjusted operating profit by 2029. Four percent revenue growth is less than the 6% compound annual revenue growth FedEx has enjoyed since the turn of the century, but reflects greater competition from Amazon and other sources. In the fiscal year ended in May, FedEx had $87.9 billion of revenue. It is guiding to an adjusted income of $5 billion for fiscal year 2026.
FedEx said it plans to achieve an operating margin of 8%, an increase of 200 basis points, return on invested capital of 11%, and adjusted free cash flow of $6 billion.
The three-year outlook was released as part of an Investor Day event held at its headquarters in Memphis, Tennessee. On Monday, Fedex announced it is investing about $2.6 billion to take a 37% stake in European parcel delivery specialist InPost.
The integrated parcel and logistics giant also anticipates improved performance for the domestic and international businesses, targeting a 10% operating margin, vs. the baseline of 8.9%, for the U.S. operation and an 8% international margin, up from 3.6%.
Projected revenue gains are evenly accounted by $6 billion in higher yields and $6 billion through a modest 2% volume growth from the primary domestic and international networks, along with $1 billion in growth from segments such as FedEx Office, FedEx Logistics, FedEx Supply Chain and FedEx Dataworks, CFO John Dietrich said.
The financial goals exclude FedEx Freight, which the company is scheduled to spin off as a separate company this summer.
FedEx said it will keep capital expenditures near all-time lows, with aircraft spending not to exceed $1 billion through 2029. In three years, FedEx expects the capital expenditure-to-revenue ratio to be approximately 4%, well below historical levels. By comparison the ratio was 8.6% in 2020 and 7% in fiscal year 2023, excluding FedEx Freight. And 90% of capital investments will be for maintaining the network, modernizing facilities and equipment, and other efficiency needs instead of expanding capacity.
It also raised guidance for third quarter adjusted earnings per share due to strong results and a positive peak season during the holiday period.
Strategic pillars
FedEx’s growth strategy is based on four focus areas. The company continues to target premium B2C and high-value B2B segments, such as healthcare, automotive, aerospace, data centers and premium e-commerce. The company recently emphasized that nearly half of its revenue growth was from higher weight, higher margin B2B business.
Management also reiterated plans to build on FedEx’s data and technology advantages, leveraging the company’s two petabytes of data and advanced AI capabilities to better support customers and drive new lines of revenue.
FedEx continues to modernize and consolidate its air and surface networks, part of a multi-year initiative to gain efficiency, drive up profits and improve service levels.
An important part of reaching the financial targets, FedEx said, involves making sure that new operational savings are formalized so they can be permanently sustained.
“FedEx remains one of our top transport picks in 2026. We see momentum with its network integration, cost cutting strategy, profitable share gains, yield discipline, upcoming June 1, 2026, spin of FedEx Freight, and benefits from the potential end of the nearly four-year freight recession,” said Bank of America equity analyst Ken Hoexstra in a recent client note.
FedEx recorded $23.5 billion in fiscal second quarter revenue, up 7% year over year, while adjusted operating income grew 17% to $1.6 billion. The adjusted earnings per share of $4.82 was up 19% year over year.
(Correction: The fiscal year 2026 to 2029 strategy unveiled by FedEx covers three years, not four.)
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Write to Eric Kulisch at ekulisch@freightwaves.com.
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