FedEx results top targets on cost-cutting, shares jump 5.5% after the bell

FedEx international export volume fell due to US tariffs on China, while the domestic delivery volume grew, helping to offset tariff impact

FedEx reported quarterly profit and revenue above Wall Street estimates, as cost-cutting and strength in domestic deliveries helped offset weaker international volumes after the US ended tariff exemptions on low-value, direct-to-consumer shipments.

Shares of Memphis-based FedEx climbed 5.5% in extended trading on Thursday after surprising Wall Street. Analysts had expected profit per share to fall due to the end of "de minimis" exemptions, which allowed shipments valued under $800 to enter the US duty-free.

While total international average daily export volume fell 3%, overall average daily volume including domestic parcels rose 4% for the quarter, and revenue per package increased by 2%.

FedEx has been working on slashing billions of dollars in operating costs by parking planes, closing facilities and merging some of its units. It has a $1 billion cost-saving plan for this fiscal year ending in May 2026.

Those efforts helped shelter profits.

Closely watched operating margin increased to 6% from 5.2% during the quarter, which saw a 5% jump in domestic average daily delivery volume, fueled by US consumer spending resilience despite worries about inflation and rising joblessness.

FedEx reported an adjusted profit of $912 million, or $3.83 per share, for the first quarter ended August 31, up from $892 million, or $3.60 per share a year earlier. Analysts on average had expected a profit of $3.59 per share, according to data compiled by LSEG.

Its quarterly revenue of $22.24 billion also beat analysts' estimate of $21.66 billion.

Global tariffs, particularly related to the end of the de minimis exemption for China and Hong Kong, cut first quarter revenue by $150 million. That is expected to repeat every quarter this year, Chief Customer Officer Brie Carere said.

Combined with other revenue pressures and expenses, trade policies represent a $1 billion headwind for the year, she said.

That "is predominantly an impact of top line revenue reduction, because China to the US is a very profitable lane for us," Carere said.

FedEx forecast 2026 earnings per share largely below analysts' estimates.

It expects full-year adjusted earnings in the range of $17.20 to $19.00 per share, marginally below analysts' average estimate of $18.21 at the midpoint.

The US on May 2 ended the century-old "de minimis" exemptions for packages from China and Hong Kong.

Those shipments accounted for about three-quarters of roughly 1.4 billion packages that entered the United States each year under the programme.

The US ended exemptions for all other countries on August 29.

FedEx said it completed $500 million of share repurchases in the quarter and is on track to spin off its freight segment by June 2026.