FedEx reported better-than-expected earnings and revenue for the fiscal fourth quarter of 2025, highlighting its successful completion of a major cost-cutting initiative. The company achieved its goal of $4 billion in structural cost reductions through its DRIVE program, despite economic challenges.
CEO Raj Subramaniam emphasized the company’s commitment to further transformation through network integration and lower service costs, forecasting long-term value creation. However, despite the positive financial performance, shares dropped 5% in after-hours trading due to guidance that fell short of Wall Street’s profit expectations.
FedEx Beats Estimates, Cuts Spending, and Plans Further Savings in Fiscal 2026
For the quarter ending May 31, FedEx reported adjusted earnings per share of $6.07, surpassing analyst expectations of $5.84. Revenue also exceeded projections, reaching $22.22 billion compared to the anticipated $21.79 billion. The company’s U.S. daily package volume increased by 6%, with ground home delivery volume up by 10% year over year. Net income rose to $1.65 billion from $1.47 billion a year earlier. On a full-year basis, revenue grew marginally to $87.9 billion from $87.7 billion in fiscal 2024.
FedEx Tops Q4 Estimates and Cuts Record Costs but Stock Falls on Weak OutlookFedEx demonstrated disciplined capital management by reducing capital expenditures to $4.1 billion in fiscal 2025, down 22% from $5.2 billion the previous year. This drop brought capital spending as a percentage of revenue to its lowest level in the company’s history. The reductions align with FedEx’s long-term strategy to improve profitability through its DRIVE initiative, which began in fiscal 2023. Looking ahead to fiscal 2026, the company is targeting an additional $1 billion in cost savings.
FedEx Faces Trade Headwinds and Leadership Transition Amid Freight Division Spin-Off Plans
While FedEx refrained from offering full-year fiscal 2026 earnings and profit forecasts, it did provide guidance for the fiscal first quarter. Revenue is expected to remain flat or grow by up to 2%, slightly more optimistic than the estimated 0.1% decline. However, projected adjusted earnings per share of $3.40 to $4.00 fall short of the $4.06 estimate.
CFO John Dietrich attributed part of the headwind to a $170 million impact from global trade policy changes, particularly related to international exports. Executive VP Brie Carere noted that much of this pressure stems from shipments between China and the U.S., affected by changes in de minimis tax provisions.
The quarterly results also arrive during a period of transition for FedEx. The company recently mourned the passing of its founder and executive chairman, Fred Smith, who had stepped down as CEO in 2022. Additionally, FedEx announced plans to spin off its Freight division into a separate publicly traded entity within the next 18 months. This move is expected to allow for more strategic focus within each segment, continuing the company’s broader efforts to streamline operations and improve long-term efficiency.
