FedEx forecasts profits below analysts' target, shares dive 5% after hours
[LOS ANGELES] FedEx signalled caution ahead with a forecast for the current quarter that was short of the target set by analysts, and shares of the delivery giant dived more than 5 per cent after the bell.
The Memphis-based company forecast fiscal first-quarter adjusted profit of US$3.40 to US$4 per share. That was below analysts' estimates of US$4.06 per share, according to data compiled by LSEG.
FedEx and many other companies have been grappling with deep uncertainty over US trade policies and regional tensions, most recently Israel's attack on Iran.
US President Donald Trump's whiplash tariffs on China and pending deals with many other trading partners have forced executives to put business plans on hold until they have more certainty on product costs.
'The global demand environment remains volatile,' CEO Raj Subramaniam said on an earnings webcast.
'Trade policies are evolving and trade patterns are changing.'
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FedEx is more exposed to China trade than rival United Parcel Service (UPS), whose shares were down less than 1 per cent. Washington slapped 145 per cent tariffs on China in April, freezing trade between the superpowers, before lowering them to 30 per cent in May.
FedEx and UPS are considered economic bellwethers because they work with virtually every type of company around the globe and spot business trends before they become widely visible.
FedEx declined to give full-year earnings and profit forecasts, overshadowing better-than-expected results for the fiscal fourth quarter that ended May 31, when the firm said cost cuts and improved export volumes pushed operating margins higher.
Adjusted profit was US$1.46 billion, or US$6.07 per share, for the fiscal fourth quarter ended May 31, up from adjusted profit of US$1.34 billion, or US$5.41 per share, a year earlier.
Revenue was US$22.2 billion, up from US$22.1 billion.
Analysts, on average, expected earnings of US$5.81 per share on revenue of US$21.8 billion, according to LSEG.
FedEx and UPS have been locked in a long battle for market share, with demand stalled from manufacturers and other industrial customers. Delivery profits have been squeezed as many customers downshifted from fast, pricey air services to slower, lower-cost ground shipments moved by trucks and trains.
Both FedEx and UPS used air volume from China-linked bargain sellers such as Temu and Shein to help replace lost business-to-business volume.
But after a botched attempt early this year, Trump's administration in May ended duty-free treatment for direct-to-consumer shipments valued at less than US$800 from China, stopping millions of air parcels from Temu, Shein and other retailers.
Separately, FedEx said it plans to spin off its trucking business in June of 2026. REUTERS
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