FedEx Corp. has delivered a stronger-than-expected earnings report for its fiscal fourth quarter, surpassing Wall Street forecasts on both revenue and profit. The logistics giant also announced a new $1 billion cost-cutting plan for the coming fiscal year after meeting its $4 billion savings goal under its DRIVE initiative.
CEO Raj Subramaniam hailed the results as a reflection of “structural cost reduction” in the face of economic challenges. “Our transformation initiatives, integrating networks and reducing cost-to-serve, are creating long-term value,” he stated.
For the quarter ending May 31, FedEx posted adjusted earnings per share of $6.07, beating the expected $5.84. Revenue came in at $22.22 billion, exceeding analyst expectations of $21.79 billion.
Despite the strong earnings, FedEx shares fell by nearly 6% in after-hours trading, as the company's forward guidance for the first quarter of fiscal 2026 fell slightly short of investor expectations. The projected EPS range of $3.40 to $4.00 was below the StreetAccount consensus of $4.06.
By the Numbers:
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Quarterly net income: $1.65 billion ($6.88 per share), up from $1.47 billion ($5.94) YoY
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Fiscal 2025 revenue: $87.9 billion (vs. $87.7 billion in FY 2024)
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Daily U.S. package volume: +6% YoY; Ground home delivery: +10%
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Capital spending: $4.1 billion, down 22% from FY 2024
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Capex-to-revenue ratio: Lowest in FedEx’s history
The company’s DRIVE transformation plan, initiated in 2023, is credited with achieving $4 billion in cost savings by FY 2025. Building on that, FedEx now targets an additional $1 billion in cuts for FY 2026, though it has withheld full-year earnings forecasts.
International trade headwinds were also noted. CFO John Dietrich cited a $170 million Q1 impact from global trade policies, mainly from China-to-U.S. shipments affected by de minimis regulations. EVP Brie Carere reinforced that most of this drag is rooted in shifting U.S.-China trade dynamics.
Looking ahead, FedEx expects flat to modest revenue growth (up to 2%) for Q1 FY 2026, a cautiously optimistic view given continued macroeconomic pressures.
In a strategic move, FedEx plans to spin off its Freight division within the next 18 months, creating two publicly traded companies. This corporate restructuring is seen as part of the broader push to sharpen focus and boost profitability.
The earnings news follows a somber moment for the company, as FedEx founder and longtime chairman Fred Smith passed away last week at age 80. Smith had stepped down as CEO in 2022, handing the reins to Subramaniam.
