MW FedEx hopes to save $1 billion this fiscal year. But its profit forecast is still sinking shares, as tariffs weigh on shipments.

By Bill Peters

Company expects revenue from China to U.S. to remain under pressure during first quarter

Shares of FedEx Corp. fell after hours on Tuesday after the package-delivery giant forecast a fiscal first-quarter per-share profit that came in shy of Wall Street's expectations, amid expectations for tariffs to weigh on shipments from China to the U.S.

And as U.S. trade negotiations between China and other nations add more suspense to the economic outlook, FedEx's $(FDX)$ full-year forecast offered only limited visibility into the months ahead, as the company tries to cut billions in costs and find ways to boost margins following some three years of lighter shipping demand.

Shares slid 6% after hours on Tuesday.

"The global demand environment remains volatile," Chief Executive Raj Subramaniam said on the company's earnings call. "We're staying close to our customers to help them plan and adapt as they navigate trade policy changes."

"We are actively matching our capacity with demand as the environment evolves," he added.

During the fourth quarter, he said, as businesses tried to recalibrate their shipping arrangements after President Donald Trump announced expansive new tariffs, FedEx was able to act quickly. The company cut its shipping capacity - or its network of planes, trucks and logistics hubs - between Asia and the Americas by more than 35%.

Subramaniam said FedEx moved $2 trillion worth of goods yearly, and that the company, which hauls packages via ground and air in the U.S. and abroad, sat at "the center of a global trade ecosystem." Still, the disruptions in that ecosystem, along with lost sales related to last year's expiration of a contract to deliver items for the U.S. Postal Service, weighed on FedEx's first-quarter outlook.

Management said it expects first-quarter earnings per share of $2.90 to $3.50, or $3.40 to $4 after factoring out costs related to "business optimization initiatives" and the planned spinoff of its freight business, set for June 2026.

Wall Street currently expects first-quarter GAAP earnings per share of $3.83 and adjusted earnings per share of $4.05.

FedEx also said it expects a "flat to 2% revenue growth rate" for its first quarter. Analysts polled by FactSet were expecting $21.73 billion in sales, which would represent year-over-year sales growth of 0.6%.

The company said it was aiming for $1 billion in cost savings during its fiscal 2026, which runs through next May. But its outlook for that year offered no specifics on how the bottom line might look. Management said it would be "resuming" its outlook for adjusted profits "as visibility improves."

FedEx reported adjusted earnings of $6.07 a share for its fourth quarter, with revenue of $22.2 billion. Analysts polled by FactSet expected FedEx to report adjusted earnings per share of $5.82, with sales of $21.74 billion. It said it hit its goal of cutting $2.2 billion in cost cuts during the prior fiscal year.

FedEx's stock is down around 18.4% so far this year. While the harshest of Trump's tariffs are on pause for now, the duties overall have threatened to push prices higher and make businesses and people more apprehensive about getting items shipped. The company has tried to slash costs and streamline operations since late 2022, when prices began rising sharply and hurting shipping demand.

Brie Carere, FedEx's chief customer officer, said during Tuesday's call that competition from rivals seeking to undercut the company on price had eased up.

She also said FedEx was focusing on more shipments of higher-margin, bigger packages and delivering to rural areas. FedEx recently announced a new partnership with Amazon.com Inc. $(AMZN)$ focused on delivering larger packages from the online retailer to less-populated places.

However, ahead of the results, some analysts said more customers were likely switching to cheaper shipping options. And they were skeptical on the results, given sluggish retail sales, questions about the impact of tariffs on shipments from China, and questions about how much retailers and other businesses might try to rely on the items they already have in stock.

"Our conversations with investors over the past month?indicate cyclical and secular concerns are in focus for investors in both FDX?and UPS," UBS analyst Thomas Wadewitz said in a research note on Monday.

-Bill Peters

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June 24, 2025 20:18 ET (00:18 GMT)

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