FedEx sees profit gain while warning on inflation, trade turmoil

FedEx Corp. reported a profit that beat Wall Street’s expectations as the courier navigated tumultuous trade policies and rising costs that have buffeted the package-delivery business.

Adjusted earnings were $6.31 a share for the fiscal fourth quarter, the company said Tuesday in a statement, well above the average of analysts’ expectations compiled by Bloomberg.

Still, shifting global trade policies and the grounding of its MD-11 cargo jet fleet were “significant headwinds” to its operations in the period, Chief Executive Officer Raj Subramaniam said on a conference call with analysts. Its profit margin for the past quarter declined to 8.4%, below analysts’ expectations.

FedEx’s shares fell more than 6% in after-hours trading in New York Tuesday, suggesting the results fell short of investor expectations after a strong run-up in the first half of the year. The company significantly beat Wall Street’s estimates in recent quarters and the stock gained about 36% this year through Tuesday’s close, more than the broader S&P 500 Index’s 7.6% advance.

FedEx also said adjusted earnings would grow in 2026 as its turnaround effort continues and it shifts to report financial results in line with the calendar year.

The new earnings target is “slightly below expectations, giving management room to raise guidance depending on how the year progresses,” Bloomberg Intelligence analysts wrote in a note Tuesday, explaining the pressure on the stock.

FedEx is working to continue its momentum as demand remains uneven and the company faces higher costs due to inflation. It’s also faced turmoil from the ongoing war in Iran as well as shifting trade flows due to President Donald Trump’s tariffs.

FedEx will start passing tariff refunds to customers in August, Chief Customer Officer Brie Carere said on the call.

The courier is seen as an economic barometer because its parcel business carries packages for a wide array of industries and consumers around the world.

The company expects higher wages, purchased transportation rates and other inflationary expenses to increase costs by $2.6 billion this year compared to 2025.

FedEx is working to boost profit margins by prioritising parcels in the healthcare and aerospace industries, which tend to have attractive returns. It’s also targeting other categories such as heavy parcels, luxury goods and cross-border shipping.

Fresh Outlook

Adjusted earnings will be $16.90 to $18.10 per share in calendar year 2026, up from an estimated $15 in 2025, the company said. The fresh outlook excludes the results of FedEx’s freight business, which was spun off earlier this month.

It wasn’t immediately clear whether Wall Street’s profit estimates for this year incorporate that separation.

Investors had cheered the decision to spin off the business, which was a “clear headwind” and made FedEx a “cleaner, more focused parcel business", Conor Cunningham, an analyst at Melius Research, wrote in a June 18 note. FedEx investors were given one share of FedEx Freight for every two shares they held in the original company on May 15, with cash distributed instead of partial shares. The remaining FedEx company retained 19.9% of the outstanding Freight shares, to be disposed of within two years.

FedEx Freight Holding Co. began trading independently from the parcel company on June 1. It’s entering the market as one of North America’s largest cargo firms at a time when the industry is seeing a fragile recovery from a prolonged freight recession. The stock’s early trading has been volatile due in part to lingering investor questions over the company’s outlook. FedEx Freight is scheduled to report its first quarterly earnings on Thursday.

FedEx and its peers face growing competition from Amazon.com Inc.’s planned expansion of its logistics business. FedEx’s shares tumbled the most in more than a year in early May after Amazon announced those plans, which Morgan Stanley analyst Ravi Shanker said could be a “watershed moment” for the sector.

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